The news: Snap is considering seeking outside funding for its AR Spectacles as it struggles to compete with Meta platforms and TikTok, per The Information.

Snap CEO Evan Spiegel, whose company has invested over $3 billion in AR over the past 11 years, may be ready to court outside capital to help the company compete with Big Tech rivals.

Zooming out: Snap’s future could hinge heavily on the success of Spectacles amid challenges in engagement, Gen Alpha adoption, and profitability. It appears to be placing a sizable bet on a product that may not deliver the scale or impact needed.

The company once led the pack in AR features and short-form video content, but with the rise of products like Meta’s Reels, YouTube Shorts, and Ray-Ban Meta Smart Glasses, it’s no longer strongly differentiated.

Snap also may not have the deep pockets to withstand a losing venture as Meta has with Reality Labs, which has lost $60 billion over the past five years. Its 9% YoY increase in revenues in the previous quarter didn’t show strong profits to prop up AR spending either—it was the company’s slowest growth in over a year.

Gen Z may not be enough: Internal concerns are growing about losing touch with Gen Alpha, who aren’t joining Snapchat the way Gen Zers and millennials did, per The Information. Struggles with user acquisition and resulting ad revenues could raise the stakes for Snap’s wearables play to succeed.