December 9, 2022

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Surprise 'terrible' sales wipe out $69 billion of social media stock

Surprise ‘terrible’ sales wipe out $69 billion of social media stock

(Bloomberg) — US social media giants were on track to shed nearly $69 billion of market value Thursday, as disappointing revenue from Snap Inc. Concerns about the expectations of online advertising.

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Snapchat’s stock was down 28% in trading before the bell. Shares of Meta Platforms Inc. fell. parent Facebook Inc. fell 4.7%, while shares of Alphabet Inc. and Twitter Inc. Google owns about 2.5%.

The losses represent Snap’s second big sell-off in two months, with its results becoming a barometer for investors trying to understand how economic uncertainty is affecting ad spending. There are growing signs that tech companies are preparing for a recession with some pulling back on hiring, while Meta has lost about half its value this year after disappointing revenue forecasts.

“Earnings optimism may pause for now,” said Tina Teng, markets analyst at CMC Markets Plc. in Auckland. “Snap’s failure in earnings forecasts points to the severe challenges that its tech peers face, typically on social platforms such as Meta Platforms.”

Snap — which saw $6 billion in market capitalization after hours Thursday — did not issue financial guidance for the third quarter, except to say revenue so far in the period was flat compared to a year ago. Management also reiterated that it plans to “significantly reduce the employment rate,” echoing plans by Apple Inc. and others.

Vital Knowledge described the results from Snap and Seagate Technology Holdings Plc as “appalling” and “ugly”. Collapsing tech stocks could already face more pressure as earnings season picks up next week.

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Read: Snap Growth Dimmed to 2023 in Uncertainty: Bloomberg Intelligance

“With more and more big tech companies planning to slow hiring and lower growth expectations, the economic outlook is definitely not in good shape,” said CMC’s Teng.

(Updates are shared all the time.)

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