Evan Spiegel, co-founder and CEO of Snap Inc., speaks at the Google Pixel Fall Launch virtual event in New York on Tuesday, October 19, 2021.
Michael Nagle | Bloomberg | Getty Images
On Tuesday, Snap shares fell 40%, leading the campaign to its worst day and pulling down other social media and digital advertising campaign stocks.
The fall came after Snap issued a warning to investors on Monday, saying it would not reach its targets for revenue and adjusted earnings this quarter.
“Since we published the instructions on April 21, 2022, the macroeconomic environment has deteriorated further and faster than expected,” the SEC said in a statement. Shares have fallen about 83% from a 52-week high in September 2021 and have fallen 70% since the start of the year.
The filing also led his colleagues to rely heavily on advertising in the morning. Shares of Meta fell more than 9%, Roku – more than 15% and Pinterest – more than 26%. Alphabet and Twitter fell 8% and 3% respectively.
Snap Warning is also affecting the ad technology industry. Trade Desk fell 22%, Magnite fell 14% and PubMatic also fell more than 12%.
“We expect all online advertising platforms to feel the impact of a significant consumer setback,” Morgan Stanley analysts said in a note to investors on Tuesday. “Advertising is cyclical.”
Concerns about inflation, interest rate concerns, protracted supply chain problems and the war in Ukraine have prompted some advertisers and brands to reconsider advertising spending this quarter. Companies, including Snap, have been forced to slow down hiring and cut costs to make up for losses.
“We see no real reason not to take the negative previous release of Snap for face value. Digital advertising is cyclical, but, like all advertising, Macro’s headwinds are likely to get much heavier, ”Evercore ISI analysts said Monday.
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