Snap, Unprofitable for Nine Years, and Its Decade-Long Obsession with AR—Still Without Return
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Snap, Unprofitable for Nine Years, and Its Decade-Long Obsession with AR—Still Without Return
While cutting jobs to save money, it is also heavily investing in a vision that has yet to yield returns after ten years.
Navigating Web3 tides with focused insightsAuthor: June, TechFlow
On June 16, Snap CEO Evan Spiegel officially unveiled its AR glasses, “Specs,” at the Augmented Reality World Expo, priced at $2,195.
On the same day, SNAP’s stock plummeted nearly 10%, closing at $5.16.
Shortly thereafter, a viral post appeared on Reddit’s famous retail-investor community r/wallstreetbets:
The poster called the CEO “brain-damaged,” likened the company to a “capital furnace,” and even begged others to share screenshots of losses—just so he could sleep soundly.
He voiced the market’s most direct question: Why would a company that has posted losses year after year bet its turnaround on a pair of glasses that young people simply cannot afford?
A product you may never have used—but have certainly seen
If Snapchat sounds unfamiliar to readers in China, you’ve almost certainly encountered its wildly popular “dog filter”:
That virtual puppy—tongue out, ears swaying with head movement—was one of the most breakout Lenses (AR filters) launched by Snapchat in 2015.
The real-time facial tracking technology behind it came from Looksery, a Ukrainian startup Snap acquired for approximately $150 million. This remains the largest acquisition in Ukrainian tech history—and while Looksery built the underlying tech, it was Snapchat that turned it into a global phenomenon, inspiring celebrities and everyday users alike.
A pioneer repeatedly copied
In many ways, reviewing Snapchat’s history feels like reading a chronicle of “being copied.”
Its pioneering Stories format was nearly replicated verbatim by Instagram—and today, nearly every social app features something similar. Its camera-first interface and left-right swipe navigation have been adopted industry-wide for nearly a decade. Even its early bet on AR glasses was beaten to market by Meta’s Ray-Ban smart glasses—a runaway hit.
Snapchat consistently stands at the technological frontier—yet has never translated that first-mover advantage into commercial dominance.
This is evident in its stock price.
From its all-time high of $83.34 in September 2021, SNAP has plunged 94% over the past five years—starkly diverging from the broader U.S. equity market, which has repeatedly set new highs during the same period.
2021 coincided with the peak of pandemic-driven tailwinds—and also marked the turning point. That year, Apple tightened iOS privacy tracking restrictions, directly undermining Snap’s core ad-targeting capabilities. In subsequent years, TikTok and Instagram surged, while Snap—hampered by persistently weak profitability—never regained its prior valuation.
Returning to the viral Reddit post mentioned earlier:
Why did Snap’s stock drop immediately after its new product launch? Why were the Specs mocked nearly universally across X and Reddit?
First, consider its core user base. Snapchat’s primary demographic is Gen Z—ages 18 to 24. Selling a $2,195 pair of glasses to a cohort largely unable to afford them is plainly unrealistic.
Placing Snap within its peer group makes this dilemma even clearer.
Among content-centric social platforms, Meta posted quarterly revenue of $56.3 billion and net profit nearing $27 billion; ByteDance and Xiaohongshu are both profitable.
Snapchat alone continues posting net losses: $89 million in Q1 2026—even as user counts and revenue rise. Since its 2017 IPO, Snap has reported annual net losses every single year. The root cause? Young users aren’t advertisers’ preferred demographic; brands prefer allocating budgets toward the 25–45 age group—the prime consumer cohort.
Youthfulness, ironically, has become Snap’s monetization burden.
A near-decade AR gamble
Against this backdrop, Spiegel doubled down.
He dubbed 2026 the company’s “crucible moment.” In April, Snap laid off roughly 1,000 employees—16% of its workforce—citing AI’s ability to automate repetitive tasks.
Yet simultaneously, the company has invested over $3.5 billion into the Specs AR glasses production line. Counting from the debut of the first-generation Spectacles in early 2016, this high-stakes bet has now spanned nearly a decade.
To understand how far this journey has come, we must revisit those original glasses.
Image: First-generation Spectacles (2016)
Launched in September and hitting shelves in November 2016, these iconic bright-yellow glasses were sold via street-side vending machines. A small camera embedded in the frame allowed hands-free capture of circular short videos—shared directly to Snapchat. Strictly speaking, they weren’t true AR: wearing them merely enabled video recording and sharing. In essence, they were little more than a fun wearable toy.
Image: Specs (2026)
Ten years later, Specs can overlay digital information onto real-world scenes, run AI functions, recognize hand gestures, and operate independently—without a smartphone. From “video-capturing glasses” to “spatial computers worn on the face,” this leap spans a decade—and represents Spiegel’s true long-term bet.
What truly triggered investor outrage across the board, however, was the widely perceived absurd pricing.
The question is: What exactly does the extra cost buy?
Compared to the $799 Ray-Ban Display—which embeds only a tiny HUD in the lens corner—Specs delivers genuine AR: digital content overlays, gesture recognition, and standalone operation. Functionally, it sits a clear tier above.
Yet Specs weighs ~132 grams—nearly double the Ray-Ban Display—and offers only ~4 hours of battery life. Core use cases—navigation, measurement, asking AI questions—are already handled perfectly well by smartphones. At $2,195, Specs delivers a “category leap”—but not necessarily a mature, daily-usable product. That, perhaps, is investors’ real concern.
When activist investor Irenic Capital publicly pressured Snap to shut down or spin off the Specs division to preserve cash flow, Spiegel refused outright—insisting Specs remains integral to the company’s long-term model.
Cutting staff to save money—while pouring capital into a vision yielding zero returns for a decade.
This is Snapchat’s current reality.
Conclusion
In 2015, Snapchat captivated the world with an AR effect resembling a playful virtual puppy. Eleven years later, its all-in AR glasses bet garners near-universal skepticism.
Yet not everyone sees it as mere folly.
Some place it within the evolution of mobile devices. From brick-like early cellphones to today’s smartphones took over thirty years. Today’s expensive, bulky Specs may simply be an awkward, transitional step on AR glasses’ path to maturity.
But in an era obsessed with short-term returns and herd mentality, is Spiegel—a founder unwavering in his convictions—a rare industry outlier… or a gambler destined for market extinction?
That question, perhaps, each observer must answer for themselves.
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