Snap Inc. (SNAP.N) disappointed Wall Street with lower-than-expected quarterly revenue, further highlighting its struggle to compete in the digital advertising market. This setback caused a significant drop in its shares by 30%, raising concerns about its ability to contend against tech giants like Meta Platforms and Alphabet.

Despite frequently copied features, Snap faces challenges in maintaining its position against competitors with larger data pools for targeted advertising. Analysts speculate that Snap's struggles may stem from internal issues rather than macroeconomic factors.

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During a conference call, analysts questioned Snap CEO Evan Spiegel about the company's competitive disadvantage. Spiegel emphasized the significant growth opportunities ahead, particularly in serving advertisers focused on driving sales and website traffic.

Although fourth-quarter revenue fell short of analyst estimates, Snap remains committed to growth initiatives. The company recently announced layoffs of 10% of its staff to reallocate resources for long-term growth.

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Looking ahead, Snap plans to concentrate on expanding its user base and investing in key markets like North America and Europe. Despite stagnant user growth in these regions, Snap aims to revitalize engagement among existing and potential users.

While daily active users surpassed analyst expectations in the fourth quarter, most growth came from regions with lower advertising revenue. Snap projects further user growth and revenue expansion in the first quarter, exceeding analyst forecasts.

Following the earnings report, Snap's shares plummeted by 33% in after-market trading, reflecting investor concerns about its revenue performance and future prospects.