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.
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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