Snapchat Ad Revenue Takes a Hit Due to Pricing Glitch

Snap's sales were impacted by an advertising snafu, where a change in the company's structure caused some advertisers to win bids at significantly reduced prices. The incident resulted in a loss of revenue for Snap, which reported a decline in advertising sales. The company is working to address the issue and restore trust with advertisers.

Snap Inc. (SNAP) experienced a significant drop in its stock price on August 6, 2025, following the release of its second-quarter earnings report. The company reported a 17% decrease in shares after market close, driven by a glitch in its advertising platform that led to reduced revenue. Snap's second-quarter advertising revenue grew at its slowest pace in more than a year, rising by approximately 4% to $1.17 billion [2].

The issue, according to Snap's earnings release, was a change that caused some campaigns to clear the auction at substantially reduced prices. This error was identified and corrected, with the company stating that advertising revenue growth has since improved as advertisers adjust their bid strategies [1]. Despite the setback, Snap's overall revenue grew by 9% year-over-year to $1.34 billion, with daily active users rising by 9% to 469 million [1].

The company's stock decline was exacerbated by the elimination of the "de minimis" provision, which had previously allowed for the sale of smaller ad units at lower prices. This change, combined with the advertising platform glitch, raised concerns among investors about Snap's ability to capitalize on the advertising market effectively [3].

Snap's stock has underperformed its peers this year, with Meta (META) and Reddit (RDDT) up 31% and 26%, respectively, while Snap's stock is down nearly 29% [2]. However, the company's outlook for the current quarter remains positive, with third-quarter revenue projections ranging from $1.48 billion to $1.51 billion, exceeding analyst expectations [2].

Snap continues to focus on building a subscription business, with Snapchat+ subscribers approaching 16 million in Q2. The company also announced plans to launch its first fully stand-alone AR glasses in 2026, aiming to further expand its augmented reality capabilities [1]. Despite the recent challenges, Snap remains committed to addressing the advertising platform issues and restoring trust with advertisers.

References:
[1] https://deadline.com/2025/08/snap-shares-fall-snapchat-advertising-revenue-1236479337/
[2] https://finance.yahoo.com/news/snap-stock-plummets-as-ad-platform-glitch-weighs-on-q2-revenue-earnings-152825686.html
[3] https://www.ainvest.com/news/snap-stock-plunges-17-47-earnings-advertising-concerns-2508/