Snap shares drop on report that it's offering discounts to advertisers

  • Snap is giving discounts and coupons to media buyers in order to get them to spend more on advertising, according to Digiday.
  • The company fell short of revenue estimates in the first report after its IPO.

Snap is giving advertisers discounts if they agree to buy ads this quarter using its internal platform, sources told CNBC.

An agency told CNBC that Snap was offering discounts to advertisers who haven't bought ads through its ad platform before. Another source confirmed similar concessions.

However discounts for new advertisers are not uncommon in the industry, the agency noted.

Snap shares declined as much as 4 percent in after-hours hours trading after the Digiday story published.

The news of Snap offering discounts was originally reported by Digiday on Wednesday. A media buyer told the publication Snap offered a 10 percent "bonus media coupon" for additional advertising space. Another agency said it got a 10 percent "reservation" discount, which would give it additional credit for any advertising bought through Snap's ad platform. One buyer also was offered discounts on ads bought through the platform.

Snap's revenue of $150 million last quarter, its first as a public company, fell short of analyst estimates, sending the stock down more than 20 percent. The company also added fewer users than projected.

On Wednesday, The Information also reported CEO Evan Spiegel "refused to accept" the company was facing a user growth issue. Competition is growing from Facebook, which has copied many of Snap's features.

Snap declined to comment.