Shares of Snap Inc fell more than 30% on Friday and hit their lowest level since the pandemic.
Shares of Snap Inc fell more than 30% on Friday and hit their lowest level since the pandemic, after the company’s forecast for zero revenue growth showed more pain ahead for social media industry that relies heavily on digital advertising.
Facebook-parent Meta Platform Inc and Pinterest Inc fell from 2% to 7%. Twitter Inc fell 3%, also dragged by concerns about security reviews of billionaire Elon Musk’s takeover bid.
Analysts rush to cut their price target on Snap, with Morgan Stanley take it to a Wall Street as low as $7. During early trading, the stock hit its lowest level since early 2019.
The digital advertising space has taken a hit as brands cut marketing and advertising budgets to meet dwindling consumer demand. Snap’s warning exacerbated those fears.
“This is really a cautionary tale… advertisers could be showing that we’re in a recession because they’re not willing to spend on these smaller platforms,” Kim said. Forrest of Bokeh Capital Partners said.
So far this year, digital advertising companies have collectively lost about $1 trillion in value as a result of stiff competition from TikTok and challenges from Apple Inc’s Privacy Changes to the iOS platform allow users to opt out of data tracking.
Snap reported its slowest revenue growth as a public company for its latest quarter on Thursday and forecast no revenue growth for the usually busy holiday quarter.
SNAP’S WOES
Advertisers have relied on Snap’s platform to exploit its popularity among teens and young adults.
But Apple’s privacy changes have made it harder to track and measure ads on Snapchat, prompting big brands to shift their ad spend to larger, more accessible platforms. more people.
“A challenged macro continues to show ad buyers prioritizing their larger, core platforms, namely Google and Meta, when they track health,” said Bernstein analyst Mark Shmulik. consumer health,” said Bernstein analyst Mark Shmulik, adding that ad buyers reduce their spend especially on smaller test platforms.
Snap shares have lost about 77% of their value so far this year, while Alphabet, Meta and Pinterest have lost between 30% and 60%. However, Twitter jumped 21% thanks to the possibility of billionaire Musk buying the company.
“We believe Snap will find it difficult to take control of its own destiny over the next six to nine months,” said MKM Partners analyst Rohit Kulkarni.
