Social media investors just got bearish after Snap‘s CEO Evan Spiegel sent a memo to its employees that basically said things are going to get worse from here. On Monday, Evan Spiegel warned that the company will miss the targets that have been predicted for the second quarter due to macroeconomic reasons.
The global supply chain issue, rise in inflation and interest rates, the ongoing Russia-Ukraine war, and policy changes like Apple’s privacy feature are creating a negative impact on the growth of social media platforms.
A part of Snap’s letter was filed with the SEC. It read, “The macro environment has deteriorated further and faster than anticipated. As a result, we believe it is likely that we will report revenue and adjusted EBITDA below the low end of our Q2 2022 guidance range.”
Facebook’s parent company, Meta shares plunged 10%. Similarly, Snap’s shares dipped more than 40% on Monday.
This letter created an upheaval in social media and digital advertising stocks. Facebook’s parent company, Meta shares plunged 10%, erasing $53 billion in market value. Similarly, Snap’s shares dipped more than 40% on Monday. With this, Pinterest, Google, and Twitter stocks plunged 23.6%, 5%, and 5.6% respectively. The investors’ worry about the economic slowdown and the sale of consumer goods caused a ripple effect in stocks.
This warning message erased a combined $200 billion in market value from social media and digital advertising companies. Analysts and experts noted that this note is more industry-specific than ‘Snap-specific’ as a slow economy will likely impact the advertising results across the internet so ad-dependent platforms will face more impact than the rest. Companies are also cutting back on their digital ad spending.
For a tiny company like Snap, its letter created a big impact in the industry. On the other hand, the CEO of JP Morgan pointed out that while storm clouds are forming over the economy, they may dissipate before becoming a hurricane.