Snap Inc. (SNAP): A Closer Look at the Stock's Recent Decline

Snap Inc. (SNAP), the parent company of the popular social media platform Snapchat, has been facing a significant stock price decline in recent months. As of January 2025, Snap's stock price has dropped by over 20% compared to its peak in 2021. This article aims to explore the primary factors contributing to Snap's recent stock price decline and provide an analysis of the company's financial performance and user base expansion compared to its competitors in the social media sector.

Snap's recent stock price decline can be attributed to several primary factors:

1. Slowing User Growth: Snapchat's user growth has been stagnating, particularly in the United States. In 2018, daily active users decreased from 191 million in Q1 to 186 million in Q4, leading to a significant stock price drop from a high of $27.09 at IPO in 2017 to $4.92 in December 2018.
2. Apple's Ad Tracking Changes: In 2022, Apple implemented changes to its iOS that limited the ability of apps to track user data without explicit consent. This negatively impacted Snapchat's advertising revenue, as it relies heavily on targeted ads.
3. Downturn in Online Advertising: The global economic slowdown and uncertainty in 2022 led to a decrease in online advertising spending, which also affected Snapchat's revenue.
4. Regulatory Scrutiny: In January 2025, the Federal Trade Commission (FTC) referred a complaint against Snap to the Department of Justice, alleging that Snapchat's AI chatbot, My AI, violated consumer protection laws. This regulatory scrutiny may have contributed to the stock price decline.
5. Competition: Snapchat faces intense competition from other social media platforms, such as Instagram, TikTok, and Facebook, which may have led to a decrease in user engagement and advertising revenue.



Snap's revenue growth and user base expansion have been steady, but they have not kept pace with some of its major competitors in the social media sector. Here's a comparison:

1. Revenue Growth:
- Snap's revenue growth has been relatively stable, with a CAGR of around 30% from 2017 to 2023. However, it has not experienced the explosive growth seen by some of its competitors.
- Facebook (now Meta) has seen a CAGR of around 35% from 2017 to 2023, while TikTok's revenue growth has been astronomical, with a CAGR of over 100% during the same period.

2. User Base Expansion:
- Snapchat's user base has grown steadily, with a CAGR of around 15% from 2017 to 2023. However, it has not kept up with the rapid user growth seen by some of its competitors.
- TikTok's user base has grown exponentially, with a CAGR of over 100% from 2017 to 2023. Instagram, another major competitor, has also seen significant user growth, with a CAGR of around 25% during the same period.

3. Market Share:
- As of 2023, Snapchat has a global market share of around 10% in the social media sector, while Facebook (Meta) has a market share of over 20%, and TikTok has a market share of around 15%.

Regulatory challenges, such as the FTC's referral of a complaint against Snap's AI chatbot, have had a negative impact on Snap's stock performance. On January 16, 2025, the Federal Trade Commission (FTC) announced that it had referred a complaint against Snap to the Department of Justice. The complaint alleges that Snapchat's artificial intelligence chatbot, My AI, used deceptive and manipulative tactics to engage with users. This news led to a 5% drop in Snap's stock price on the same day, indicating that investors were concerned about the potential legal and reputational implications of the complaint.

In conclusion, Snap Inc.'s (SNAP) recent stock price decline can be attributed to several primary factors, including slowing user growth, Apple's ad tracking changes, a downturn in online advertising, regulatory scrutiny, and intense competition. While Snap's revenue growth and user base expansion have been steady, they have not kept pace with some of its major competitors in the social media sector. Investors should be cautious about Snap's future prospects until the legal situation surrounding the FTC's referral of the complaint against Snap's AI chatbot is resolved.