Shares of companies selling digital ads, like Alphabet and Meta, dropped after Snap, the owner of Snapchat, announced it was seeing the slowest growth in its revenue since five years when it went public. Snap Inc. mentioned inflation as the reason behind this slower growth in revenue.
The reason
Snap Inc. released figures on its earnings for the September quarter as the first big social media establishment to do so. The company’s stock tumbled 25% after the result was out, and Snap warned that revenues wouldn’t come in the holiday quarter.
The announcement by Snap Inc. made the shares of other companies selling digital advertisements fall as well. The shares of Meta, the Facebook owner, and Alphabet, the Google owner, dropped by 4% and 2%, respectively, and Pinterest shares fell by almost 8%. The ultimate impact was the loss of more than $40 billion in stock market value from all the digital ad companies, including Roku and Spotify.
Snap warns of lesser revenue when the shares of social media owners are already down. Meta saw its shares fall almost 60% this year, and the shares of Pinterest went down 40%.
About Snap Inc.
Snap enjoyed a record-high close in its shares in September last year, and since then, the social media giant’s stock has dropped 90%.
Snap told the investors through a letter that advertisers started reducing marketing budgets because of inflation.
Earlier in August, the company announced its plans to reduce employee employees by 20% and discontinue projects, like drones and gaming, for cost-cutting and recovering from the economic deterioration.
Meta and Alphabet Reports
Meta and Alphabet will report their quarterly results next week, and investors are keen to glance at the financial conditions and see how the reports shape the market conditions.
