TLDR
- Snap stock dropped 8.2% to $7.71 with volume hitting 260 million shares
- OpenAI launched Sora, an AI-powered social video app with vertical feed design
- Mizuho set Neutral rating and $9 price target on weak advertising trends
- Consumer sentiment fell to 94.2, missing expectations of 96.0
- Snap lost over $400 million in the first half of 2025
Snap stock crashed on Tuesday as investors digested news of fresh competition and cautious analyst commentary. Shares closed at $7.71, down 8.21% for the session.
The social media company saw trading volume explode to 260 million shares. That represents 3.4 times its three-month average of 77.46 million shares.
OpenAI Launches Direct Competitor
OpenAI unveiled its Sora social video app, creating another headache for Snap management. The new platform features a vertical video feed with swipe-to-scroll navigation that mirrors TikTok’s design.
Sora focuses on AI-generated content rather than user-created videos. The app allows users to create videos, remix content, and discover new material through a customizable feed.
One unique feature lets users insert themselves into AI-generated scenes through “cameos.” Users complete a one-time recording to verify their identity and capture their likeness.
The launch adds pressure to Snap’s already challenged business model. The company was already competing with TikTok and Instagram for user attention and advertiser dollars.
Wall Street Grows More Cautious
Mizuho issued a Neutral rating on Snap with a $9 price target. The firm cited weak feedback from advertising channels as justification for its stance.
This marks another cautious view from Wall Street. Multiple analysts have issued Neutral ratings on the stock in recent weeks.
Advertising revenue concerns continue to dominate the narrative around Snap. Competition in social advertising shows no signs of easing.
Economic Data Weighs on Sentiment
The Conference Board reported September consumer sentiment at 94.2. The reading fell 3.6 points from August and missed economist expectations of 96.0.
Lower consumer confidence typically translates to reduced advertising spending. This dynamic creates additional pressure on Snap’s core revenue stream.
Social media peers also struggled. Meta Platforms fell 1.21% to $734.38, while Reddit dropped 4.95% to $229.99.
The broader market painted a different picture. The S&P 500 gained 0.41% and the Nasdaq Composite rose 0.30%.
Financial Performance Remains Weak
Snap has fallen nearly 30% year-to-date. The stock trades at 29.7 times 2025 earnings estimates using non-GAAP figures.
Those projections exclude stock-based compensation. When including this expense, Snap remains deeply unprofitable on a GAAP basis.
The company reported over $400 million in net losses during the first six months of 2025. Revenue growth has slowed to single digits.
Snap’s 52-week range spans $6.90 to $13.28. Current prices sit near the low end of that range as investors question the company’s competitive position.
The combination of new competition, skeptical analysts, and weak financial performance creates a challenging outlook. Snap’s market cap stands at $13 billion with a gross margin of 51.14%.
