The shares of Snap, the parent company of Snapchat, have nosedived 20% after missing Wall Street estimates in the 2023 first-quarter earnings.
Snap’s revenues dropped by 7% to USD 989 million from USD 1.063 billion during the year-earlier period, while the net loss narrowed from USD 360 million to USD 329 million.
Free cash flow has stayed at USD 103 million, compared to the 2022 figures of USD 106 million, the filings stated.
However, Snap saw its daily active user count increase by 15% (year-over-year) to 383 million, the company stated in a statement.
Snap CEO Evan Spiegel said, “Our community continues to grow, reaching 383 million daily active users in Q1, and we are working to deepen engagement with our content platform while building innovative new features and services like My AI.”
“We are working to accelerate our revenue growth and we are using this opportunity to make significant improvements to our advertising platform to help drive increased return on investment for our advertising partners,” he added further.
For its second quarter of 2023, Snap has given a revenue projection of USD 1.04 billion, lower than the analysts’ expectations of USD 1.10 billion.
Snapchat has also launched ‘My AI’ for all users, a new AI-powered chatbot to make conversational artificial intelligence useful, including relevant Augmented Reality (AR) Lenses and recommendations from the Snap Map.
“Total time spent watching Spotlight content grew more than 170 per cent year-over-year, and Spotlight reached more than 350 million monthly active users on average in Q1, representing an increase of 46% year-over-year,” the company stated.
However, the ‘My AI’ move failed horribly, as the AI chatbot, which was initially launched in February 2023 for paid subscribers, has now seen a 488% increase in the search term “delete Snapchat” as people are reportedly unhappy with the service.
The AI bot, which was seen as a tool to help Snap users to plan their daily activities, is now reportedly saying “creepy things” to the customers, thus resulting in the deletion of the app en masse.
Research conducted by CloudTech 24 has shown that the term “delete Snapchat” has skyrocketed five times more than usual over the last three months, with the search term “how to delete my Snapchat account” rising by some 70%.
Digital Camera World’s Ecommerce editor, Sebastien Oakley, stated in an article, “I used to love Snapchat and still use it today for the odd friend here and there, but due to the new AI function and an experience my friend has, I don’t want to touch it.”
“My friend agreed to the AI function, not really understanding what it was, and after posting a picture of her with her sister’s newborn, it suddenly started asking about her baby. When she asked how did it know she had a baby, it started to backtrack – which is pretty scary stuff,” he wrote further.
Users have also been complaining about being unable to unpin ‘My AI’ from the top of the chat list unless they purchase a ‘Snapchat Plus’ subscription. While many users are now asking Snapchat to get rid of the AI bot entirely, others have decided to delete the app altogether.