Snap dives 32% and it’s dragging other stocks down with it
[ad_1]
Snap Inc.’s co-founder, Evan Spiegel is the chief executive officer. He spoke at the Virtual Google Pixel Fall Launch Event in New York Tuesday, October 19, 2021.
Michael Nagle | Bloomberg | Getty Images
Snap shares plummeted 32% in pre-market. It set Snap up for its worst ever day, and was a drag on other digital ad companies stocks.
After the tumble, SnapInvestors were warned Monday by the company that it will not meet its revenue targets and adjust earnings goals for this quarter.
“Since we issued guidance on April 21, 2022, the macroeconomic environment has deteriorated further and faster than anticipated,” the company said in an SEC filing.
This filing was also a strong indicator for its peers that it relied heavily on advertising in the premarket. The shares of MetaRoku was down over 7% while they were up more than 7 % PinterestStocks fell over 14% Google TwitterBoth dropped by 4% and 33%, respectively.
Snap’s warning also has an effect on the adtech industry. The Trade Desk fell 10%, MagniteThey dropped more than 6% PubMaticPre-market trading saw a drop of more than 22%
Morgan Stanley analysts wrote in a Tuesday note to investors that “We expect all of the online ad platform to feel some effect from a significant consumer drawback.” Advertising is always cyclical.
Some brands and advertisers are being forced to review their current quarter advertising spend because of concerns around inflation, ongoing supply chain issues, and continued tensions with Ukraine. Snap is one of the companies that has been forced to reduce costs and slow down hiring in order to cover losses.
Snap’s pre-release negatives are not something we can ignore. “Digital advertising is not cyclical. But, like all advertising and Macro headwinds will very likely get much worse,” Evercore ISI analysts stated in a Monday memo.
[ad_2]