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“Our learnings from SNAP last week increase this risk. “The platforms that are most at risk to losing dollars to TikTok are those that have ad businesses that are more branded dependent and less performance (transaction) driven,” Nowak wrote. The company offers Snapchat, a camera application with various functionalities, such as Camera, Communication, Snap Map, Stories, and Spotlight that enable. He expects TikTok to grow its ad revenue significantly in 20, building its branded ad business with offers of lower pricing for advertisers. Those factors don’t bode well as Snapchat competes with TikTok for brand spending, Nowak believes. “Combine this with the fact that in order to grow SNAP must continue to convince new advertisers to come onto the platform and experiment (which we think will be more difficult through periods of economic weakness) and the outlook becomes much less certain.”
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“The macro challenge now is that those branded dollars are among the first to be cut in times of economic weakness,” Nowak wrote. Made to iOS in 2021 that hit direct-response advertising-ads that seek to prompt people to sign up for a service or make a purchases-through growth in branded ad spending, the analyst wrote. The Snapchat stock price fell by -39.08 on the last day (Friday, 22nd Jul 2022) from 16.35 to 9.96.During the day the stock fluctuated 12.11 from a day low at 9.91 to a day high of 11.11.The price has been going up and down for this period, and there has been a -33.42 loss for the last 2 weeks. Nowak argued that the report shed light on Snap’s ad business, which he thinks is less developed than he previously believed. The news of Snap's poor results hit a host of technology companies. After falling nearly 40% on Friday, Snap shares were mostly flat at $9.95 on Monday, while the S&P 500 index was up 0.1%. Technology stocks had another rough day on Friday, and the biggest reason appeared to be Snap's (NYSE: SNAP) earnings report. The numbers highlighted how Snapchat’s advertising business is struggling as the economy weakens and competitive challenges mount, most notably from TikTok.