TECHNOLOGY

Snapchat Parents Bad Quarter Destroys $80 Billion in Ad Industry Market Cap

Facebook owner Meta Platforms, Google owner Alphabet and other companies selling online ads lost about $80 billion in combined market cap on Thursday after Snap published poor quarterly results and warned of uncertain prospects.

Plagued by a weakening economy, increased competition from TikTok, and recent privacy changes on iPhones, the Snapchat owner missed Q2 revenue targets and warned that “forward-looking visibility remains incredibly challenging.”

Shares plunged 26%, bringing Snap’s loss to over 70% in 2022.

With Wall Street already concerned about a potential recession, Snap’s report also led to a sell-off among rival internet ad sellers. Meta fell 5% in expanded commerce, while Alphabet fell 3% and Pinterest plummeted 7%.

Shares of Twitter fell less, losing just under 2%.

The Snapchat owner missed second-quarter revenue targets, warning that “forward-looking visibility remains incredibly challenging.” AFP via Getty Images

The decline in Alphabet’s stock reduced its market cap by more than $40 billion, and Meta’s loss reduced its market cap by about $25 billion. The fall in Snap’s stock evaporated $7 billion of its value.

Snap’s poor report also hit other growth stocks, with Spotify Technology, Shopify and Roblox each falling about 3% after hours.

With Twitter suing Elon Musk to force the billionaire to fulfill his April promise to buy Twitter for $44 billion, many investors view Twitter’s stock as a gamble on the outcome of that impending legal battle, rather than a reflection. of the company’s current foundations.

Twitter will report its quarterly results early Friday, but the microblogging platform has canceled its traditional conversation with analysts, pointing to Musk’s “upcoming acquisition.”

In its report, Snap said its daily active users grew 18% year-over-year to 347 million, exceeding analyst expectations.

But that user growth comes as social media company customers experience inflation at its highest point in 40 years and brace for a potential economic downturn, an environment where brands spend less on advertising and exert more control over their spending. advertising dollars.

Alphabet publishes its second quarter results on July 26, Meta reports on the results on July 27 and Pinterest on August 1.

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