Meta Platforms, Alphabet and other companies that sell online ads lost about $80 billion in combined stock market value on Thursday after Snap posted poor quarterly results and warned of an uncertain outlook.
Slammed by a weakening economy, increased competition from
TikTok and recent privacy changes on iPhones, the Snapchat owner missed
second-quarter revenue targets and warned that "forward-looking visibility
remains incredibly challenging."
Its shares collapsed 26 percent, bringing Snap's loss in
2022 to over 70 percent.
With Wall Street already worried about a potential
recession, Snap's report also sparked a selloff in rival internet ad sellers.
Meta dropped 5 percent in extended trade, while Alphabet fell 3 percent and
Pinterest tumbled 7 percent.
Twitter's shares fell less, losing just under 2 percent.
The drop in Alphabet's shares cut its market capitalisation
by over $40 billion, and Meta's loss reduced its market capitalisation by about
$25 billion. The drop in Snap's shares evaporated $7 billion of its value.
Snap's poor report also hit other growth stocks, with
Spotify Technology, Shopify and Roblox down around 3 percent each after hours.
With Twitter suing Elon Musk to force the billionaire to
make good on his April promise to buy Twitter for $44 billion, many investors
view Twitter's stock as a wager on the outcome of that upcoming legal battle,
and less as a reflection of the company's current fundamentals.
Twitter is set to report its quarterly results early on
Friday, but the micro-blogging platform has canceled its traditional call with
analysts, pointing to Musk's "pending acquisition".
In its report, Snap said its daily active users rose 18
percent year-over-year to 347 million, beating analysts' expectations.
But that user growth comes as the customers of social media
companies face inflation at 40-year highs and brace for a potential economic
downturn, an environment where brands spend less on advertising and apply
greater scrutiny to how they spend their advertising dollars.
Alphabet posts its second-quarter results on July 26, Meta reports on results on July 27, and Pinterest on August 1. © Reuters
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