Snap Inc Reassesses AR Strategy Amidst Economic Headwinds

Snap Inc (SNAP:US), renowned for its photo messaging app, Snapchat, recently revealed the closure of its AR Enterprise Services (ARES) division. This comes just months after its inception, signaling difficulties in the current economic landscape dominated by cautious advertising spending.

The ARES initiative was launched to offer businesses specialized AR services, including a comprehensive Shopping Suite. However, despite its potential, ARES faced challenges in garnering significant traction. CEO Evan Spiegel highlighted the predicament, stating, "It would take significant incremental investment to grow our enterprise offering for retailers and we simply cannot make that investment at this time." Spiegel also pointed to the advent of generative AI, making it tough for Snap to maintain a distinct edge as other companies create similar AR experiences.

The decision to shut down ARES reflects the challenges many tech firms face in a rapidly evolving market with tight competition. The closure will sadly result in approximately 170 job cuts, although some may find roles in other divisions.

Based on data from CapitolTrades, several politicians, including Ro Khanna, Josh Gottheimer, and John Hickenlooper, have divested from Snap Inc. They sold their stock holdings, ranging from $1,000 to $15,000, in April and early May when the share prices were between $7 and $10. Although the stock price peaked at $13.89 in July, it has since declined to $8.49. There have been no further reported trades involving Snap shares since then.