Shares of technology fell on Tuesday, and investors abandoned shares of companies that recovered during the pandemic.
SNAP shares -43.08% of social networking company Snap Inc. they lost $ 9.68, or 43%, to $ 12.79, their largest percentage drop on record. The company issued a profit notice on Monday and said it planned to curb hiring and spending. The share price has fallen by 85% since its all-time high in September 2021.
Other technology actions that depend on spending on digital advertising also fell. Google’s parent company Alphabet Inc. was down $ 110.36, or 5%, to $ 2,119.40, while Meta Platforms Inc. was down. it dropped $ 14.95, or 7.6%, to $ 181.28. Video Playback Company Roku Inc. recently dropped $ 12.61, or 14%, to $ 79.16, while Twitter Inc., which last month agreed to sell to Tesla Inc. CEO Elon Musk, was trading at $ 2.10. , or 5.6%, to $ 35.76. .
Technology-focused Nasdaq Composite was down 2.3% after finishing 1.6% on Monday. The Nasdaq, which has fallen 28% so far this year, has been hit harder than other major U.S. indices. The broad-based S&P 500, by comparison, is down 17%.
Bets on technology stocks have been undone this year, punished by the Federal Reserve’s plan to raise interest rates to control the four-decade high of inflation. The market as a whole has also shrunk due to geopolitical turmoil, inflationary pressures and a global economic slowdown.
“The fall in Snap is confirmation that the market has very little tolerance for higher-growth, long-term companies with more volatile returns in a risk-averse environment,” said Robert Stimpson, chief investment officer. ‘Oak Associates. Currently, Mr. Stimpson prefers large-cap, top-tier companies to volatile technology stocks.
Snap’s warning could indicate that advertising spending has peaked, analysts say.
“It’s usually one of the first areas where companies cut back when they start making cuts when times get tough,” said Fiona Cincotta, senior financial market analyst at UK trading services company City Index. “The fact that we are seeing it now is really surprising because the situation is deteriorating so rapidly for businesses and for the economy at large.”
Diverting the trend on Tuesday was another pandemic winner: video conferencing company Zoom Video Communications Inc. ZM 5.61%, which rose $ 5.01, or 5.6%, to $ 94.34 after raising its earnings outlook while reporting its slowest growth rate on record.
Shares of 1.21% of Best Buy Co. BBY rose 88 cents, or 1.2 percent, to $ 73.47 after the consumer electronics retailer reported sales and earnings fell during the last quarter. The company said its results for the current fiscal year will be worse than previously forecast amid rising promotions and higher supply chain spending.
Write to Hardika Singh at hardika.singh@wsj.com
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