Home Trade industry Snap report incinerates $80 billion in ad industry market cap

Snap report incinerates $80 billion in ad industry market cap

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A woman stands in front of the Snap Inc. logo on the floor of the New York Stock Exchange (NYSE) as they wait for Snap Inc. to publish its IPO, in New York, NY, U.S., March 2, 2017. REUTERS/Lucas Jackson

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July 21 (Reuters) – Facebook owner Meta Platforms (META.O), owner of Google Alphabet (GOOGL.O) and other companies that sell online ads lost around $80 billion in combined market value Thursday after Snap (SNAP.N) reported poor quarterly results and warned of an uncertain outlook.

Slammed by a declining economy, increased competition from TikTok and recent privacy changes to iPhones, the Snapchat owner missed second-quarter revenue targets and warned that “forward-looking visibility remains incredibly challenging.”

Its shares tumbled 26%, taking Snap’s loss in 2022 to more than 70%.

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With Wall Street already worried about a possible recession, Snap’s report also sparked a sell-off from rival internet ad vendors. Meta fell 5% in extended trade, while Alphabet fell 3% and Pinterest fell 7%.

Shares of Twitter (TWTR.N) fell less, losing just under 2%.

Alphabet’s stock decline reduced its market capitalization by more than $40 billion and Meta’s loss reduced its market capitalization by approximately $25 billion. Snap’s stock drop evaporated $7 billion from its value.

Snap’s poor report also hit other growth stocks, with Spotify Technology (SPOT.N), Shopify and Roblox (RBLX.N) down around 3% each after hours.

As Twitter sues Elon Musk to force the billionaire to fulfill his April promise to buy Twitter for $44 billion, many investors view Twitter’s stock as a bet on the outcome of this upcoming legal battle, and less as a reflection of the company’s current fundamentals. .

Twitter is expected to release quarterly results early on Friday, but the microblogging platform canceled its traditional call with analysts, pointing to Musk’s “ongoing acquisition.”

In its report, Snap said its daily active users grew 18% year-over-year to 347 million, beating analysts’ expectations. Read more

But this user growth comes as 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 enforce greater scrutiny. how they spend their advertising dollars. Read more

Alphabet reports second-quarter results on July 26, Meta reports results on July 27, and Pinterest on August 1.

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Reporting by Noel Randewich; edited by Richard Pullin

Our standards: The Thomson Reuters Trust Principles.