Snap and Reddit report a tale of 2 social cos as they follow different visions
A ghost and an alien… walk into a boardroom. Reddit (mascot = Snoo the alien) and Snap (mascot = Ghostface Chillah the ghost) posted earnings yesterday: while Snap’s sales grew an expectation-beating 15%, it projected disappointing guidance for the holiday quarter. The teen-populated app has struggled to lure advertisers from larger rival Meta, which reports today. Reddit stock popped 16% to a record high after the site known for quirky forums like r/BreadStapledToTrees said revenue surged 68% last quarter (and it gave a strong holiday-quarter forecast).
Two stories… Both social cos, which are largely dependent on ads, have been laying the groundwork for fresh revenue streams. Reddit’s looking to AI. The site has data-licensing partnerships with Google and OpenAI, supplying both with an endless trove of quirky convos to humanize their AI bots. Reddit’s deal with Google is worth an estimated $60M/year, while its OpenAI deal is sweetened with AI features planned for redditors. While Snap’s dabbled in AI with a Google-powered chatbot called “My AI,” its big bet is on augmented reality (think: AR filters).
Snap Spectacles: Last month Snap rolled out its fifth-gen AR glasses for developers. Snap says it’s bullish on helping developers build advanced experiences within its app (picture: petting a virtual Moo Deng) that can be used to create engaging ads.
Companies need a vision… apart from just good ol’ ad revenue. Investors get hyped by big bets on futuristic tech, which is partly why AI, AR, and VR have become buzzwords in earnings reports. Big bets can help companies diversify and get an edge on rivals, but turning those visionary dreams into dollars is the hard part.