A woman stands in front of the Snap Inc logo on the floor of the New York Stock Exchange (NYSE) in New York City, NY, USA, March 2, 2017. REUTERS / Lucas Jackson
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May 24 (Reuters) – Shares of Snap Inc (SNAP.N) fell more than 40% on Tuesday, boosting sales across the industry after a earnings warning from the Snapchat parent difficult times for the digital advertising industry, once booming.
The company was on the verge of losing $ 15 billion in market capitalization, while the shares of major online advertisers and social media companies were on the verge of losing a combined $ 200 billion worth of losses.
Meta (FB.O), Pinterest (PINS.N), Twitter (TWTR.N), and Google-parent Alphabet (GOOGL.O) platforms fell between 7% and 24%.
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Snap said Monday that it expects to lose the quarterly revenue and earnings targets set just a month earlier and that it should slow hiring and cut spending.
The bleak view of one of the industry’s well-known names underscores the impact of the Ukrainian war, rising inflation and rising interest rates on social media companies just as they were trying to undo the impact of changes to Apple’s iOS operating system. Read more
“Snap is a proxy for online advertising, and when you see a weakness in it, you automatically think of Facebook, Pinterest, and Google,” said Dennis Dick, a trader for Bright Trading LLC.
“Once you start thinking about Google, that’s when the markets start selling.”
Tuesday’s sale comes days after a survey of Bank of America fund managers indicated that investors are becoming increasingly bearish with technology stocks, a marked investment in the upward trend of the past 14 years.
Snap’s shares were trading at $ 13.3, lower than their 2017 stock price of $ 17.
Analysts said Snap’s core earnings outlook suggests spending will outpace revenue growth, as the workforce rose 52% in the previous quarter.
“There’s a lot to deal with in the macro environment today,” CEO Evan Spiegel said Monday at a technology conference.
Macroeconomic situation affects social media companies and digital advertising Sign up now for FREE and unlimited access to Reuters.com
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Report by Medha Singh and Nivedita Balu in Bangalore, additional report by Akash Sriram; Edited by Aditya Soni and Anil D’Silva
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