Shares of social media short-form video app Snap (SNAP) are falling on Tuesday, having declined 9.2% at 3:08 p.m. ET.
Snap fell along with most other consumer discretionary stocks today, after September consumer sentiment readings came in lower than expected. Not only that, but artificial intelligence (AI) darling OpenAI unveiled a social media short-form video app, which could be a threat to all short-form social media companies, Snap included.
OpenAI is taking on all of tech, it seems
Last night, Wired magazine learned that OpenAI was looking to launch a stand-alone social video app based on its Sora 2 image and video generator model. Apparently, the app will have a vertical video feed and swipe-to-scroll navigation, closely resembling TikTok, but for AI-generated content.
Today, the Sora team at OpenAI introduced the app, writing on the company's blog:
Inside the app, you can create, remix each other's generations, discover new videos in a customizable Sora feed, and bring yourself or your friends in via cameos. With cameos, you can drop yourself straight into any Sora scene with remarkable fidelity after a short one-time video-and-audio recording in the app to verify your identity and capture your likeness.
Of course, not all video-based social media will be taken over by AI, as people will still likely want to send videos of themselves to friends and close acquaintances. However, it's possible the launch of yet another social media app could eat into Snap's market share, which was already under fire from rivals like TikTok and Instagram.
In addition, many consumer-oriented companies are down on Tuesday after the Conference Board released disappointing consumer sentiment numbers for September. Last month's reading came in at 94.2, down 3.6 points from August and below the 96.0 that was expected. Since Snap depends on advertising revenues, lower consumer spending could affect financial results around the edges.

Image source: Getty Images.
Snap could be a value trap
Snap shares may be tempting for value investors, as it's down almost 30% on the year, and trades at "only" 29.7 times 2025 earnings estimates. However, that earnings projection is a non-GAAP figure that doesn't count stock-based compensation, of which Snap pays a massive amount. If you factor stock-based comp as a real cost, Snap is still losing a significant amount of money -- over $400 million in net losses in the first half of the year alone.
Only growing at a single-digit pace and now with new competition from OpenAI, Snap remains a stock to stay away from, at least for now.