Snap (SNAP), the online company best known for its SnapChat platform, closed down 43.08% today, May 24.
On April 21 when the company released its first quarter earnings report, the company had forecast second quarter revenue growth of 20% to 25%. That was already below Wall Street estimates. Today, the company cut that guidance. “We believe it is likely that we will report revenue and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) below the low end of our Q2 2022 guidance range,” Snap said in a written statement.
The warning hit the shares of other stocks, dependent on advertising revenue hard. Pinterest (PINS) fell 23.6%. Metaplatforms (FB) lost 7.62%.
But the damage extended to advertising shares and to technology stocks in general. Digital ad platform The Trade Desk (TTD) was down 18.5% at the close. Omnicom Group (OMC), a more traditional ad agency, was down 8.4%.
Nvidia (NVDA), which reports earnings after hours tomorrow, Wednesday, fell 4.40%. (Think anyone is nervous?) Apple (APPL) was lower by 1.92%. Advanced Micro Devices (AMD) dropped 4.11%
I didn’t find the explanation of the change in guidance from CEO Even Spiegel in a note to the company’s staff on Monday particularly convincing. 0“Like many companies, we continue to face rising inflation and interest rates, supply chain shortages and labor disruptions, platform policy changes, the impact of the war in Ukraine, and more,” Spiegel wrote. That’s pretty much a check list of everything anybody has blamed for problems in recent quarters. (I’m waiting for there plague of locusts.)
But that’s also why Snap’s plunge today had such wide resonance in the market. The company seemed to be pointing to a general slowdown in the U.S. economy.
For the day The Standard & Poor’s 500 was down 0.81% but the Dow Jones Industrial Average finished up 0.15%. The NASDAQ Composite was off a big 2.35%. The small cap Russell 2000 was lower by 1.56%. The iShares MSCI Emerging Markets ETF (EEM) closed down 1.74%.