Snap stock drops 19% on weak forecast
Snapchat founder and CEO Evan Spiegel holds up a Pixy drone at a session during the Viva Technology show in Paris on June 17, 2022.
Eric Piermont | AFP | Getty Images
Snap shares plunged at the start of trading, falling 19% as analysts and investors recoiled from a weaker-than-expected forecast for the current period.
Overall sales declined 4% year-over-year, with a slightly-than-expected lower-end total sales forecast for the third quarter. Snap is regarded by some analysts as a bellwether for digital marketing spend, which has struggled of late but is experiencing a modest recovery.
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The broader social media industry has become “harder” to forecast in, CEO Evan Spiegel said in an interview with CNBC’s Julia Boorstin on Wednesday.
Morgan Stanley maintained a $6.5 price target and an underweight rating on the social media stock. “Revenue continues to be challenged,” Morgan Stanley analyst Brian Nowak said in a Wednesday morning report. “The cost to compete for ad dollars and engagement also continues to rise,” Nowak noted.
Bank of America analyst Justin Post reiterated a neutral rating and an $11 price target. Despite “signs of smaller advertiser traction, we continue to prefer other stocks in the Online media group given Snap’s usage (time spent) pressure,” Bank of America said.
Shares of Snap have plunged significantly since reaching a November 2021 share price of over $73. The company has faced slowing daily-active-user growth in North America and, like many tech companies, laid off 20% of its global workforce, or more than 1,000 employees.
CNBC’s Michael Bloom contributed to this report.
