Citing agency executives whom it interviewed, Digiday reported that Snap Inc. (SNAP Quick QuoteSNAP - Free Report) is offering discounts to attract advertisers.

The report further added that offers, as per executives, were floated last week and will extend up to mid June, coinciding with Snap’s second-quarter end. Offers include 10% bonus media discount along with discounts for the ad purchased for the recently launched self-serve platform. Citing an anonymous executive, Digiday also stated that “Snapchat was offering its holding company a 10 percent “reservation” discount, giving a 10 percent credit for any API buy completed through Snapchat.”

There was no official word on the matter from Snap. Shares were down nearly 2% in the aftermarket hours.

Snap’s discounting strategy is widely seen as its efforts to boost performance after the dismal first-quarter report. A few days back, Snap added new options to help advertisers — “Sponsor World Lenses, Audience Lenses and Smart Geofilters.”

Snap, the parent company of social network, Snapchat, had a dazzling IPO debut. The company’s shares soared 44% on the first day of trading. However, after that, Snap had a tough time keeping the momentum going. Wall Street is divided in its opinion about the stock, with the majority having cautious sentiments.

More recently, the company’s earnings report added to its woes. Even though Snap’s top and bottom line fared better than the respective Zacks Consensus Estimate in the first quarter, the results clearly reflected a slowdown in user base.

Notably, the company added only 5 million active daily users in fourth-quarter 2016 as well as first-quarter 2017, which happens to be the lowest since third-quarter 2014. User growth holds the key to attracting advertisers, which is the primary source of revenues for Snap. A slowdown in user-base growth rate may look unattractive to advertisers.

Furthermore, the company is yet to make profits. Snap has lost money since it began operations in 2011. In the last reported quarter, losses from operations ballooned to $2.2 billion from $104 million reported year over year. Snapchat’s nosebleed valuation, despite being a loss-making company, has compelled analysts to remain wary.

Stiff competition from the likes of Alphabet (GOOGL Quick QuoteGOOGL - Free Report) and Facebook as well as smaller rivals like Twitter in the digital ad market remains an area of major concern.

Facebook outshines Snap in almost all aspects. The company enjoys a first-mover advantage in the social media space with over 1.9 billion users from every segment of demography. It has a gargantuan base of over 1 billion DAUs compared with 166 million for Snap. Facebook presents a much larger canvas for advertisers than Snapchat. In fact, Facebook’s total addressable market (TAM) has been reported to be 80% bigger than that of Snap.

Interestingly, analysts have related slowdown in user growth for Snapchat to the popularity of Instagram stories, a blatant rip-off of the former’s hallmark feature.

Zacks Rank & Share Price Movement

At present, Snap has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Since Mar 2, the company’s shares declined 17.48% against the Zacks Internet Software industry’s gain of 10.76%.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>