Snap shares fell sharply on Thursday after the company reported user growth and revenue figures that fell short of investor expectations. While daily active users rose 5% year-over-year to 400 million in the latest quarter, that metric trailed the consensus analyst estimate of 405 million. Revenue grew 12% to $1.1 billion, also missing the street’s projection of $1.12 billion. The underperformance came as broader technology names sold off, with the Nasdaq 100 down 1.8% on the same day. Investors cited concerns over intensifying competition from rival platforms and the absence of a clear near-term catalyst to spur a reacceleration in ad spending on Snapchat.

As Snap prepares to report fourth-quarter results next week, analysts expect revenue of around $1.15 billion, up approximately 14% year-over-year, driven by stronger pricing in North American ad inventory and continued rollout of vertical video ad formats. Management has highlighted that its growing base of Snapchat+ subscribers—now exceeding 5 million—should add roughly $100 million in annualized revenue this year. However, regulatory scrutiny of digital advertising practices and potential changes to data privacy rules in Europe pose headwinds to the company’s ability to target ads as effectively, making guidance for first-quarter revenue more pivotal than ever.

In a strategic move to accelerate its augmented reality ambitions, Snap on Wednesday announced that its AR glasses division will operate under a new wholly owned subsidiary called Specs Inc. The creation of Specs Inc. is designed to provide “greater operational focus and alignment” as Snap aims to launch its next-generation Spectacles later this year. The company is currently hiring for nearly 100 roles within the new unit and noted that the subsidiary structure offers “capital flexibility,” including the possibility of minority investments. Snap confirmed plans for a sixth-generation Spectacles release in 2026, touting a smaller and lighter design targeted at mainstream consumers, positioning itself against recent product launches from Meta and Google partners.