Business
Snapchat is nearing 1 billion monthly users. Why can’t it turn a profit?
Snapchat, an app whose disappearing messages and silly face filters made chatting with loved ones more casual, is close to a milestone that few social media platforms achieve: reaching 1 billion monthly users.
But Snap, the Santa Monica company behind the app, faces a crucial test. The 14-year-old tech company is still losing money and has seen its share price tumble as it barrels forward to popularize augmented reality glasses next year.
And even though more people in developing countries are using the app, Snapchat usage in markets where the company makes more revenue per user, including the United States and Europe, has dropped.
Snapchat has 943 million monthly active users globally, according to the company.
Growth in India, where TikTok is banned, and Pakistan have fueled Snapchat’s global user growth, data from market intelligence firm Sensor Tower show. In India, Snapchat monthly users have surpassed 250 million, making up more than a quarter of its user base, according to numbers Snap released in July.
At the same time, in the third quarter, Snapchat monthly active users declined by 4% in the U.S. and double digits in France, Italy, Germany and the United Kingdom, Sensor Tower said.
Snap Chief Executive Evan Spiegel wrote in a September note to employees the company is in a “crucible moment,” comparing it to a “middle child” wedged between larger tech giants and smaller rivals.
“This moment isn’t just about survival,” Spiegel wrote in the note. “It’s about proving that a different way of building technology, one that deepens friendships and inspires creativity, can succeed in a world that often rewards the opposite.”
The 35-year-old tech executive co-founded Snapchat — initially known as Picaboo — in 2011 with friends as part of a class project while attending Stanford University. Back then, texts and photos posted on social media such as Facebook and Instagram were more permanent.
Snapchat’s logo is a ghost and the app distinguished itself from its competitors by giving people a way to share photos and messages that disappeared once someone viewed it. Instead of a social media app that opens to a feed of content, Snapchat opens to a camera.
Rather than worry about whether they looked perfect, people leaned into quirky and creative ways to express themselves. They overlaid effects onto their selfies, transforming their faces into cute dogs and even puking rainbows. The app encouraged people to keep sending these disappearing messages known as “Snaps” to their loved ones at least once a day, keeping what’s known as a “streak” alive.
As Snapchat’s popularity soared, fueling the rise of vertical videos, bigger social media rivals took notice. Snapchat’s co-founders turned down Facebook’s multibillion-dollar offer to buy the company.
Facebook and its photo-sharing app Instagram copied Snapchat’s signature features including Stories, which allowed people to post images and videos that vanish after 24 hours. This prompted some Snapchat users to flock to its rival Instagram. Spiegel jokingly titled himself as the vice president of product at Meta, Facebook’s parent company, on LinkedIn, a nod to the social media giant’s cloning of Snapchat’s features.
Although Snapchat set itself apart from other social media, it also faced similar concerns tech platforms grappled with such as child safety and mental health. The app is popular among teenagers, prompting some users to question if they’re too old for Snapchat and should leave.
Alex Sirek started using Snapchat as a teen to chat and make plans with her friends, filling the app with high school and college memories.
But as she grew up, she realized there were downsides to being on the app. She constantly opened Snapchat to check her face, which made her feel bad about her skin. When friends posted about partying or going out, she felt the fear of missing out.
Last year, looking to free up storage on her smartphone, Sirek deleted Snapchat.
After about a year, the 24-year-old San Diego fitness influencer downloaded Snapchat again but rarely uses the app.
“I kept wanting to open it, but now I just don’t even think about it,” she said. “I forget that I have it on my phone.”
Investor confidence in the company has plummeted. In 2021, Snap’s stock peaked at more than $83 per share. Snap’s share price closed Tuesday at $7.64.
Competing with larger rivals such as Instagram, Facebook, YouTube and TikTok, for ad dollars has been challenging for Snapchat and it has struggled to consistently turn a profit. Apple’s privacy feature made it tougher for advertisers to track users across apps and websites, posing an extra hurdle for social networks.
Research firm eMarketer estimates that in 2025 Snapchat will claim 2.1% of U.S. social network ad spending, but said that share is dropping.
Snapchat’s initial focus on disappearing messages made it tougher for the company to rope in advertisers because people typically don’t want to see ads in the middle of a private conversation. But the company has been updating its ad tools and expanded the places where ads are shown, including between short videos.
Although Snapchat is popular among Gen Z and millennials, its audience might limit what businesses want to advertise on its platform.
“It definitely skews a lot younger and that naturally sort of limits advertiser interests in its audience,” said Max Willens, a senior analyst at eMarketer. If a business wants to advertise retirement planning, for example, they would probably go to Facebook instead of Snapchat.
On Snapchat, advertisers have also used augmented reality effects to promote their brands in quirky ways to a young audience. Snapchat users can transform themselves into a dancing McDonald’s McRib sandwich or snap selfies with digital animals from the Disney film “Zootopia 2.”
Snap has been looking at other ways to make money. The company offers subscription plans so users can customize the app’s wallpaper, personalize their digital avatars known as Bitmojis and see how often their friends view their content. It started to limit the amount of free storage it offers to 5 gigabytes. AI company Perplexity said it will pay Snap $400 million over one year so users can find answers from its “AI-powered answer engine.”
In the third quarter, Snap revenue reached $1.5 billion, up 10% compared with the same period last year. The company narrowed its net loss to $104 million, versus a net loss of $153 million during the year-earlier period.
This month, JP Morgan analysts raised Snap’s price target to $8 after the Perplexity deal but kept an underweight rating on the shares, meaning they expect the stock to underperform.
The firm said Snap has “a sizable market opportunity, an engaged user base, and a solid track record of innovation” but it’s also looking for “more consistent execution, improved user & revenue trends, & greater profitability.”
Snap has made bold and expensive bets on the future of computing by releasing a drone and glasses to capture photos and videos — though those products flopped. Now Snap plans to release augmented reality glasses in 2026 that let people interact with digital images overlaid onto the physical world. Instead of taking out your phone, people will be able to review documents, stream movies, play chess and more through glasses.
For now, analysts say it’s too early to tell if Snap’s bets will pay off or the company will end up in the social media graveyard like Myspace or Vine.
“There’s nothing written down that says you just get to be around forever if you’re a social media platform,” Willens said. “Although almost all of those still kind of trudge along in some state or another.”
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Politicians in Washington and the reporters who cover them have an often adversarial relationship.
But on the last Saturday in April, they gather for an irreverent celebration of press freedom and the First Amendment at the Washington Hilton Hotel: The White House Correspondents’ Association dinner.
Hosted by the association, an organization that helps ensure access for media outlets covering the presidency, the dinner attracts Hollywood stars; politicians from both parties; and representatives of more than 100 networks, newspapers, magazines and wire services.
While The Times will have two reporters in the ballroom covering the event, the company no longer buys seats at the party, said Richard W. Stevenson, the Washington bureau chief. The decision goes back almost two decades; the last dinner The Times attended as an organization was in 2007.
“We made a judgment back then that the event had become too celebrity-focused and was undercutting our need to demonstrate to readers that we always seek to maintain a proper distance from the people we cover, many of whom attend as guests,” he said.
It’s a decision, he added, that “we have stuck by through both Republican and Democratic administrations, although we support the work of the White House Correspondents’ Association.”
Susan Wessling, The Times’s Standards editor, said the policy is a product of the organization’s desire to maintain editorial independence.
“We don’t want to leave readers with any questions about our independence and credibility by seeming to be overly friendly with people whose words and actions we need to report on,” she said.
The celebrity mentalist Oz Pearlman is headlining the evening, in lieu of the usual comedy set by the likes of Stephen Colbert and Hasan Minhaj, but all eyes will be on President Trump, who will make his first appearance at the dinner as president.
Mr. Trump has boycotted the event since 2011, when he was the butt of punchlines delivered by President Barack Obama and the talk show host Seth Meyers mocking his hair, his reality TV show and his preoccupation with the “birther” movement.
Last month, though, Mr. Trump, who has a contentious relationship with the media, announced his intention to attend this year’s dinner, where he will speak to a room full of the same reporters he often derides as “enemies of the people.”
Times reporters will be there to document the highs, the lows and the reactions in the room. A reporter for the Styles desk has also been assigned to cover the robust roster of after-parties around Washington.
Some off-duty reporters from The Times will also be present at this late-night circuit, though everyone remains cognizant of their roles, said Patrick Healy, The Times’s assistant managing editor for Standards and Trust.
“If they’re reporting, there’s a notebook or recorder out as usual,” he said. “If they’re not, they’re pros who know they’re always identifiable as Times journalists.”
For most of The Times’s reporters and editors, though, the evening will be experienced from home.
“The rest of us will be able to follow the coverage,” Mr. Stevenson said, “without having to don our tuxes or gowns.”
A former female staffer who worked for Beast Industries, the media venture behind the popular YouTube channel MrBeast, is suing the company, alleging she was sexually harassed and fired shortly after she returned from maternity leave.
The employee, Lorrayne Mavromatis, a Brazilian-born social media professional, alleges in a lawsuit she was subjected to sexual harassment by the company’s management and demoted after she complained about her treatment. She said she was urged to join a conference call while in labor and expected to work during her maternity leave in violation of the Family and Medical Leave Act, according to the federal complaint filed Wednesday in the U.S. District Court for the Eastern District of North Carolina.
“This clout-chasing complaint is built on deliberate misrepresentations and categorically false statements, and we have the receipts to prove it. There is extensive evidence — including Slack and WhatsApp messages, company documents, and witness testimony — that unequivocally refutes her claims. We will not submit to opportunistic lawyers looking to manufacture a payday from us,” Gaude Paez, a Beast Industries spokesperson, said in a statement.
Jimmy Donaldson, 27, began MrBeast as a teen gaming channel that soon exploded into a media company worth an estimated $5 billion, with 500 employees and 450 million subscribers who watch its games, stunts and giveaways.
Mavromatis, who was hired in 2022 as its head of Instagram, described a pervasive climate of discrimination and harassment, according to the lawsuit.
In her complaint, she alleges the company’s former CEO James Warren made her meet him at his home for one-on-one meetings while he commented on her looks and dismissed her complaints about a male client’s unwanted advances, telling her “she should be honored that the client was hitting on her.”
When Mavromatis asked Warren why MrBeast, Donaldson, would not work with her, she was told that “she is a beautiful woman and her appearance had a certain sexual effect on Jimmy,” and, “Let’s just say that when you’re around and he goes to the restroom, he’s not actually using the restroom.”
Paez refuted the claim.
“That’s ridiculous. This is an allegation fabricated for the sole purpose of sparking headlines,” Paez said.
Mavromatis said she endured a slate of other indignities such as being told by Donaldson that she “would only participate in her video shoot if she brought him a beer.”
“In this male-centric workplace, Plaintiff, one of the few women in a high-level role, was excluded from otherwise all-male meetings, demeaned in front of colleagues, harassed, and suffered from males be given preferential treatment in employment decisions,” states the complaint.
When Mavromatis raised a question during a staff meeting with her team, she said a male colleague told her to “shut up” or “stop talking.”
At MrBeast headquarters in Greenville, N.C., she said male executives mocked female contestants participating in BeastGames, “who complained they did not have access to feminine hygiene products and clean underwear while participating in the show.”
In November 2023, Mavromatis formally complained about “the sexually inappropriate encounters and harassment, and demeaning and hostile work environment she and other female employees had been living and experiencing working at MrBeast,” to the company’s then head of human resources, Sue Parisher, who is also Donaldson’s mother, according to the suit.
In her complaint, Mavromatis said Beast Industries did not have a method or process for employees to report such issues either anonymously or to a third party, rather employees were expected to follow the company’s handbook, “How to Succeed In MrBeast Production.”
In it, employees were instructed that, “It’s okay for the boys to be childish,” “if talent wants to draw a dick on the white board in the video or do something stupid, let them” and “No does not mean no,” according to the complaint.
Mavromatis alleges that she was demoted and then fired.
Paez said that Mavromatis’s role was eliminated as part of a reorganization of an underperforming group within Beast Industries and that she was made aware of this.
Lululemon, the yoga pants and athletic clothing company, has hired a former executive from a rival, Nike, as its new chief executive.
Heidi O’Neill, who spent more than 25 years at Nike, will take the reins and join Lululemon’s board of directors on Sept. 8, the company announced on Wednesday.
The leadership change is happening during a tumultuous time for Lululemon, which had grown to $11 billion in revenue by persuading shoppers to ditch their jeans and slacks for stretchy leggings. But lately, sales have declined in North America amid intense competition and shifting fashion trends, with consumers favoring looser styles rather than the form-fitting silhouettes for which Lululemon is best known.
“As I step into the C.E.O. role in September, my job will be to build on that foundation — to accelerate product breakthroughs, deepen the brand’s cultural relevance, and unlock growth in markets around the world,” Ms. O’Neill, 61, said in a statement.
Lululemon, based in Vancouver, British Columbia, has also been entangled in a corporate power struggle over the company’s future. Its billionaire founder, Chip Wilson, has feuded with the board, nominated independent directors and criticized executives.
Lululemon’s previous chief executive, Calvin McDonald, stepped down at the end of January as pressure mounted from Mr. Wilson and some investors. One activist investor, Elliott Investment Management, had pushed its own chief executive candidate, who was not selected.
The interim co-chiefs, Meghan Frank and André Maestrini, will lead the company until Ms. O’Neill’s arrival, when they are expected to return to other senior roles. The pair had outlined a plan to revive sales at Lululemon, promising to invest in stores, save more money and speed up product development.
“We start the year with a real plan, with real strategies,” Mr. Maestrini said in an interview this year. “We make sure decisions are made fast.”
Lululemon said last month that it would add Chip Bergh, the former chief executive of Levi Strauss, to its board to replace David Mussafer, the chairman of the private equity firm Advent International, whom Mr. Wilson had sought to remove.
Ms. O’Neill climbed the organizational chart at Nike for decades, working across divisions including consumer sports, product innovation and brand marketing, and was most recently its president of consumer, product and brand. She left Nike last year amid a shake-up of senior management that led to the elimination of her role.
Analysts said Ms. O’Neill would be expected to find ways to energize Lululemon’s business and reset the company’s culture in order to improve performance.
“O’Neill is her own person who will come with an agenda of change,” said Neil Saunders, the managing director of GlobalData, a data analytics and consulting company. “The task ahead is a significant one, but it can be undertaken from a position of relative stability.”
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