(Reuters) – Snap will focus on expanding and diversifying its underperforming advertising business with a focus on augmented reality, CEO Evan Spiegel told employees in a note on Tuesday.
The announcement comes amid a challenging period for the Snapchat owner as it competes with major social media players such as Meta Platforms (NASDAQ:), the parent company of instagram, and Bytedance's TikTok for advertising revenue.
“You may be wondering why, despite all the progress we have made in our business over the past year, our share price performance has lagged behind the broader market. The answer is simple: Our advertising business is growing more slowly than that of our competitors,” Spiegel said in the note.
In early August, Snap projected a weak outlook for the current quarter, citing a decline in advertising spending, and is now expected to report fiscal 2024 revenue of $5.34 billion, according to LSEG data.
Snap shares have fallen about 48% so far this year.
The company will also revamp its marketplace strategy by launching new ad placements powered by machine learning and automation.
It is also developing augmented reality and smart glasses, just like its peer Meta.
“We are investing in the creation of augmented reality glasses that allow people to interact with computing, the world and each other in entirely new ways,” the statement said.
In June, Snap launched generative ai tools that allow users to apply more realistic effects when using their phone cameras to film themselves.
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