Snap Inc on Thursday missed analyst expectations for quarterly revenue as recent changes to its advertising platform hurt demand for ads, and it also warned the next quarter could be below Wall Street’s targets.

Shares of Snap dropped 19% in after-market trading.

The Santa Monica, California-based company, which owns photo messaging app Snapchat, has long been known to jumpstart new trends in social media that have been copied by larger rivals, but has faced investor questions about whether it can turn its investments in new technology like augmented reality (AR) into revenue growth.
While Snap said it was not providing formal financial guidance, its internal revenue forecast for the second quarter is $1.04 billion, which would be a 6% decline year-over-year. The internal forecast is below analyst expectations of $1.13 billion, according to IBES data from Refinitiv.

In a letter to investors, Snap said it was taking steps to improve the relevance of ads shown to users and simplify how people can interact with Snapchat ads.

As a result of the changes, a small number of Snap’s largest advertisers are seeing fewer “actions,” such as users tapping on ads, than they did previously, Snap said.

The company said it would take time for its advertising systems to adjust to the updates and result in better performing ads. Revenue for the first quarter ended March 31 was $989 million, missing analyst expectations for $1.04 billion.

Snap’s net loss was $329 million during the quarter, narrowing from a net loss of $360 million the previous year.

Along with AR, Snap has deepened its investment in artificial intelligence and recently expanded its chatbot called My AI to all Snapchat users globally.

At an annual gathering for content creators, advertisers and other partners last week, Snap also announced My AI will be able to respond to user messages with a fully AI-generated image.

Daily active users on Snapchat rose 15% year-over-year to 383 million, in line with Wall Street expectations.

Snap said it expects between 394 million and 395 million daily active users in the second quarter.

Pinterest Inc on Thursday also forecast second-quarter revenue below market expectations and its shares fell 8% in trading after the bell.

Snap and Pinterest lost more than $4 billion in combined stock market value on Thursday following their results.

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