Snap lost a 400 million dollar AI deal, 20 million dollars a month to the Iran war, and 24 per cent of its stock price. The AR glasses had better work.

Snap Q1 2026: Financial Impact of the Iran War, Lost AI Deal, and Workforce Cuts

Snap lost a $400 million AI deal, facing $20-$25 million monthly in advertising revenue due to the Iran war, and cut 16% of its workforce as it intensifies its AR glasses bet.

May 6, 2026 – 9:59 pm

Key Takeaways:

• Revenue Growth: Snap’s Q1 revenue grew 12% to $1.53 billion.
• Stock Fall: Despite strong numbers, stock fell 4% due to disclosed financial losses.
• Geopolitical Impact: The Iran war cost Snap $20-$25 million in March advertising revenue.
• AI Partnership End: The company ended its $400 million AI partnership with Perplexity AI.
• Workforce Cuts: Snap is cutting 16% of its workforce while prioritizing its AR glasses subsidiary.

Snap reported first-quarter earnings, revealing projections and partnerships that fell short of expectations. While revenue was up 12%, adjusted EBITDA more than doubled, and free cash flow nearly tripled, the stock dropped 4%. This was not merely due to the reported numbers but also the lack of positive surprises in their guidance for the second quarter.

The Iran War’s Financial Toll:
Geopolitical instability from the war in Iran resulted in Snap losing $20-$25 million in advertising revenue alone in March. This significant loss underscores the company’s exposure to geopolitical events, especially given its high reliance on brand advertising.

AI Partnership Discontinuation:
Snap’s partnership with Perplexity AI, announced last November, valued at $400 million, has been officially ended. This strategic failure adds to Snap’s financial challenges.

Fighting Multiple Battles:
Snap faces three critical challenges: the Iran war’s direct impact on advertising revenue, an AI strategy that hasn’t materialized, and the success of its AR glasses hardware bet for survival beyond messaging apps.

The earnings comparison between Snap and other big tech platforms highlights a widening gap: while Meta and Google benefit from diverse, insulated advertising businesses, Snap’s reliance on brand ads makes it more vulnerable to such disruptions.