SANTA MONICA, May 14, 2026, 08:02 PDT
Snap Inc. dropped early Thursday, sliding 34 cents to $5.27, after a new analyst downgrade stoked fresh skepticism about the Snapchat owner’s ad rebound and whether recent cost trimming will actually lead to more reliable profits. Market cap sat around $8.9 billion.
This matters, especially with Wednesday’s rebound looking fragile from the start. Snap managed to close up 1.08% at $5.61 on May 13, snapping a two-day slide, but shares continued to trail the Nasdaq and stayed well off their 52-week high.
Freedom Broker downgraded Snap to Hold from Buy after a first-quarter showing that left analyst Saken Ismailov unimpressed, according to Investing.com. Ismailov flagged geopolitical drag on ad revenue and brand budget pullbacks. The downgrade landed after a stretch when Snap had already shelved its Perplexity partnership, trimmed staff, and set a reserved tone for Q2.
On paper, Snap’s first quarter wasn’t soft. Revenue hit $1.529 billion, a 12% jump from last year. Net loss came in at $89 million; adjusted EBITDA landed at $233 million. That figure, adjusted EBITDA, takes interest, taxes, depreciation, amortization, and some extra items out of the equation. CEO Evan Spiegel pointed to a “return to growth” for daily active users and highlighted strong free cash flow. Snap Inc. Investor Relations
The mix, though, looked murkier. Advertising revenue edged up just 3% to $1.24 billion, according to the filing, while other revenue—mostly subscriptions and related items—soared 87% to $285.3 million. Snap reported ad impressions climbing roughly 17%, but the cost per ad impression slipped about 12%. More ads, but pricing power still lagging.
Snap didn’t offer much relief with its own forecast. The company projected second-quarter revenue between $1.52 billion and $1.55 billion, factoring in zero contribution from Perplexity following the end of their partnership. Snap also flagged ongoing uncertainty around its Middle East operations. Adjusted EBITDA guidance landed at $175 million to $200 million, which trails first-quarter results.
Snap CFO Derek Andersen told analysts that the Q2 outlook factors in a full three months of Middle East turbulence, though gains in North America ad revenue are helping to cushion the blow. Andersen added, Snap is targeting over $500 million in annualized cost reductions in the back half of 2026.
No sugarcoating the landscape here. Snap’s still feeling pressure from both TikTok and Meta’s Instagram, Reuters said last week. Meanwhile, Meta, Pinterest, and Reddit all turned in solid first-quarter revenue numbers. Analysts point out that smaller ad players get hit harder when advertisers cut budgets and shift dollars over to giants like Meta and Google.
Snap’s latest 10-Q singles out Alphabet, ByteDance, Meta and Pinterest as competitors, warning that these bigger players could adapt faster to tech shifts, tweaks in products or changes in advertiser demand. The company also highlights tougher privacy restrictions and changes in mobile OS, which have complicated ad targeting and measurement—potentially steering advertisers toward the industry giants.
Cost cuts have taken center stage. Snap disclosed in its latest quarterly filing plans to slash its global workforce by roughly 16%, projecting pretax charges between $95 million and $130 million—most of that landing in the second quarter. During Q1, the company also bought back and retired 49.9 million Class A shares, spending $350.5 million. As of now, $400 million remains on its buyback program announced in February.
The trouble is, layoffs and share buybacks might not shore up Snap’s ad business quickly enough. According to the company, the bulk of advertisers haven’t signed on for long-term deals, so any pullback in spending, lackluster ad performance, new regulations, or even a dip in user engagement—all of it could spell trouble. Snap logged a net loss of $89 million for the quarter and its accumulated deficit now stands at $14.4 billion.
Investors are juggling two ideas right now: Snap says subscriptions, AI-driven ads, and Specs could expand its revenue streams, while also betting North American ad sales will steady up before cost-cutting measures take hold. Thursday’s session made it clear—Wall Street isn’t handing Snap much leeway for setbacks.
