Social media firms lose $181bn in value after Snapchat warning

The owner of the Snapchat, which sends disappearing messages and adds special effects to videos, reported quarterly user growth in April that topped estimates.

Social media stocks lost more than $180bn (€167bn) in market value after Snapchat-owner Snap’s profit warning, adding to woes for a sector that is already reeling from stalling user growth and rate-hike fears.

Shares in digital ad-dependent Snap tumbled as much as 41%, their biggest intraday decline ever to trade below its 2017 initial public offering price of $17. The sell-off erased about $15bn in market value. 

Added to the value of declines for peers including Facebook-owner Meta, Google-owner Alphabet, Twitter, and Pinterest, the group has seen over $181bn wiped out.

The news spurred widespread selling across the advertising and ad-tech space. Among notable decliners were Trade Desk, Magnite, LiveRamp, and Roku, Vizio. In addition, Omnicom Group and Interpublic Group also fell. 

"At this point, our sense is this is more macro and industry-driven versus Snap-specific,” Piper Sandler analyst Tom Champion wrote in a note.

Other analysts agreed, with Citi analyst Ronald Josey saying “a slowing macro is likely impacting advertising results across the broader internet sector, although we believe platforms more exposed to brand advertising—like Twitter, Google’s YouTube, and Pinterest—are likely experiencing a greater impact overall”. 

The owner of the Snapchat, 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 platforms like Facebook and Google are competing for advertising money at a challenging time. Spiraling inflation is putting pressure on companies and consumer spending. 

Bloomberg