Snap was the first large social media firm to report its profits for the September-quarter, and Snap stock dropped by 25% after the bell on the poor results. Snap was the first major social media business to release its earnings. Snap cautioned that its typically bustling Christmas quarter will not see any improvement in revenue for the company.
After the owner of Snapchat, Snap Inc. (NYSE:SNAP), blamed inflation for its slowest revenue growth since going public five years ago, the shares of other companies that sell digital ads also dropped late on Thursday. These companies include Alphabet, which owns Google, and Meta Platforms, which sells digital ads.
Shares of other firms that sell online advertising also declined, including Facebook-owner Meta (META.O), which was down almost 4%, Alphabet (GOOGL.O), which was down 2%, and Pinterest (PINS.N), which was down nearly 8%. The market capitalization of those and other online advertising businesses, such as Roku and Spotify (SPOT.N), was reduced by more than $40 billion as a result of the sell-off that occurred during late trading (ROKU.O).
The warning from Snap comes on the heels of already significant declines in the share prices of other social media businesses, including as Meta, which is down over 60% year to date, and Pinterest, which is down almost 40%.
Investors are concerned that the aggressive interest rate rises that the Federal Reserve of the United States is planning to implement in order to reduce decades-high inflation would have a negative impact on the economy to a significant degree.
Snap Stock Price Drop
Snap stock (NYSE:SNAP) has dropped by over 90% since it closed at a record high in September 2021, when it was selling at approximately $8 per share. In 2017, following years of intense speculation and anticipation, Snap finally made its long-awaited debut on the stock market with an initial public offering that set the price of its shares at $17.
Snap stated in a letter to investors that some advertisers were forced to lower their marketing spending due to the effects of inflation.
The revenue for the third quarter that concluded on September 30 was $1.13 billion, representing a 6% rise over the same quarter in the preceding year. According to Refinitiv, the result came in much lower than the average expert forecast of $1.14 billion.
In order to reduce expenses and better prepare itself for a failing economy, the firm stated in August that it will lay off twenty percent of all of its staff and stop working on projects such as games and a flying camera drone.
On Tuesday, Alphabet will release its quarterly results, and the following day, Meta will do the same.
Featured Image- Megapixl @ Frui
Author Valerie Remorosa 
