After the performance warning issued by snap, the value of us social media stock market is expected to shrink by more than $100 billion, making it worse for industries that have been in trouble due to stagnant user growth and interest rate hikes. Snap's share price, which relies on digital advertising, fell 29% in pre session trading, setting a record one-day decline. Snap had previously warned that revenue and adjusted EBITDA in the second quarter were expected to be lower than the low range guidance value a month ago. If this decline continues, the company will lose $11.4 billion in market value.
In addition, the stock prices of companies such as meta platforms (FB. US), twitter (TWTR. US), pinterest (pins. US) and alphabet (Google. US) also fell before the market, and the US social media sector may lose us $104 billion in market value.
Piper Sandler analyst Tom champion said that compared with snap, the decline of other social media stocks was more affected by macro and industry factors.
Other analysts on Wall Street agree. Brad Erickson, capital market analyst at Royal Bank of Canada, pointed out that the performance in the field of digital advertising is generally negative, while meta and alphabet may be the least affected stocks.
Analysts warned that snap's performance warning meant that the economic environment was deteriorating rapidly, as snap said its business had increased by 30% at the end of April.
The decline in social media stocks also dragged down futures on the Nasdaq 100 index, which fell 2% on Tuesday, erasing most of Monday's gains.
Facebook, owned by snap and meta, is competing for advertising revenue. Advertisers are facing an unstable economy and Apple The change of privacy policy slowed down the booming advertising business during the epidemic.