Snap shares dropped 17% in premarket trading due to a weak quarter and intense competition in the AI-driven market. Advertisers are shifting to platforms like TikTok and Meta’s Facebook and Instagram, causing Snap’s revenue growth to slow to 8.7%. Analysts believe Snap lags in user proximity, marketing tools, and ad spend return.

Rivals Meta and Reddit outperformed Snap in the second quarter, with Snap trailing in stock performance. Snap introduced Sponsored Snaps, a new ad format, to drive user engagement. However, Morgan Stanley analysts suggest Snap needs to prove ad efficacy and lower barriers for advertiser adoption to capitalize on increased engagement.

Read more at Yahoo Finance: Snap sinks as ad glitch, fierce competition stall growth