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• Snap warning is latest blow to sinking social media stocks
• Nasdaq 100 index falls 3.2%, extending tech-stock slump
Tech and social media stocks lost more than $160 billion in market value on Tuesday after Snap Inc (NYSE: SNAP) warned that the company wouldn’t meet its own revenue and profit targets in the current quarter.
Shares of digital ad-dependent Snap tumbled more than 41%, the biggest intraday decline ever to trade below its 2017 IPO price of $17, losing around $15 billion in market cap.
Snapchat’s warning added woes to a sector that is already facing stalling user growth and rate-hike fears.
More than $200 billion in value was wiped out from peers, including Facebook-owner Meta Platforms Inc (NASDAQ: FB), Alphabet Inc (NASDAQ: GOOGL), Twitter Inc (NYSE: TWTR) and Pinterest Inc (NYSE: PINS), hitting their session lows, before paring some losses.
The news prompted widespread selling across the advertising and ad-tech space.
Trade Desk Inc (NASDAQ: TTD) sank 20%, FuboTV Inc (NYSE: FUBO) dropped 8%, Magnite Inc (NASDAQ: MGNI) slid 14%, LiveRamp Holdings Inc (NYSE: RAMP) sank 9%, Roku Inc (NASDAQ: ROKU) plummeted 17%, and Vizio Holding Corp (NYSE: VZIO) was down 8.1%.
The owner of the Snapchat app, which sends disappearing messages and adds special effects to videos, reported quarterly user growth in April that topped estimates. But with the company saying just a month later that it won’t meet prior forecasts for revenue and profit, analysts noted a rapid deterioration of the economic environment.
Snap and digital ad dependent platforms like Facebook and Google are feeling the inflationary pressure and combatting Apple Inc’s (NASDAQ: AAPL) recent privacy changes, which restrict tracking on iPhones and other products, slowing down the ad business that boomed during much of the pandemic.
User growth is another concern for social media firms as they are struggling to attract new customers to target ads in an already saturated market.
Picture Credit: Forbes
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