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Snapchat owner leads latest round of tech stock plunge

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Social media stocks lost about $147 billion in market value yesterday after Snap’s profit warning, adding to concerns for the sector already beset by faltering user growth and fears of interest rate hikes.

Bunnies in digital ad-dependent Snap plunged as much as 38 percent, their biggest intraday drop ever, losing about $13 billion in market value.

Adding to the value of the declines for rivals like Facebook-owner Meta Platforms, Google-owner Alphabet, Twitter and Pinterest, the group has seen $147.3 billion wiped out.

Snap, whose CEO is Evan Spiegel, was trading at around $14, down from its 2017 IPO price of $17.

“At this point, we feel this is more macro and industry focused than Snap specific,” Piper Sandler analyst Tom Champion wrote in a note.

Others on Wall Street agreed, with Citi analyst Ronald Josey saying, “A slowing macro is likely to impact advertising results across the internet sector, although we believe platforms more exposed to brand advertising — like Twitter, Google’s YouTube and Pinterest – will likely experience a greater overall impact.”

The owner of the Snapchat app, which sends disappearing messages and adds special effects videos, reported quarterly user growth in April that beat estimates. But when the company said just a month later that it would not meet earlier guidance for sales and earnings, analysts noted a rapid deterioration in the economic environment.

The news spurred widespread sales in the advertising and ad tech space. Among the notable price declines, Trade Desk fell 18 percent, fuboTV lost 7.7 percent, Magnite lost 10 percent, LiveRamp Holdings slumped 7.4 percent, Roku fell 13 percent, and Vizio Holding lost 5.5 percent.

In addition, Omnicom Group fell 6.4 percent and Interpublic Group of Cos lost 4.9 percent.

Snap and platforms like Facebook and Google are competing for ad dollars at a challenging time. Soaring inflation is putting pressure on businesses and consumer spending, while recent privacy changes, like Apple’s tracking restrictions, have slowed businesses that have been booming for much of the pandemic.

User growth is another big focus for social media companies trying to attract new customers to targeted ads in an already saturated market.

In February, Facebook parent Meta posted the largest one-day market value drop for a US company after saying user access had stalled.

And broader concerns about the tech sector have also hit social media stocks, with the course of US Federal Reserve rate hikes particularly weighing on tech stocks, which are valued on future growth expectations.

The Nasdaq 100 index fell more than 2 percent yesterday to reverse Monday’s gain. The tech-heavy index has fallen 28 percent this year, wiping hundreds of billions in value from companies like Apple to other so-called growth rivals like Netflix.

https://www.independent.ie/business/world/snapchat-owner-leads-latest-round-of-tech-stock-plunge-41685687.html Snapchat owner leads latest round of tech stock plunge

Fry Electronics Team

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