U.S. social-media giants were on course to shed nearly US$69 billion in market value, as disappointing revenue from Snap raised concerns about the outlook for online advertising.
US social-media giants were poised to see more than US$76 billion wiped off their stock-market values Friday after disappointing revenue from Snap Inc. raised concerns about the outlook for online advertising.
The losses mark the second major selloff sparked by Snap in two months, as its results become a barometer for investors trying to decipher how economic uncertainty is affecting advertising 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 of its value this year after disappointing revenue forecasts.
“TikTok’s strong engagement and rapid monetization growth are having an outsized impact on Snap’s business,” JPMorgan analyst Doug Anmuth wrote in a note. He cut his rating on the stock to underweight and slashed the price target to a Wall Street low of US$9. “The earnings optimism may come to a pause for now,” said Tina Teng, a markets analyst at CMC Markets in Auckland. “Snap’s miss on earnings expectations indicates the severe challenges facing its tech peers, typically on social platforms such as Meta Platforms.”
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