Social media stocks lose more than $160bn after Snap profit warning

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Social media stocks lost more than $160bn in market value after a profit warning from Snapchat’s owner Snap caused a sharp decline in the sector.

The share price of the company, which is dependent on digital advertising, plummeted more than 40 per cent after the warning, taking its price to below its 2017 initial public offering price of $17.

Facebook-owner Meta, Google-owner Alphabet, Twitter and Pinterest, were also down between 7 per cent and 24 per cent and saw more than $201.8bn wiped off their values on Tuesday before rallying and regaining some ground.

Snap’s decline came after it issued a warning to investors that it would not meet its targets for revenue and adjusted earnings this quarter.

“Since we issued guidance on April 21, 2022, the macroeconomic environment has deteriorated further and faster than anticipated,” the company stated in an SEC filing.

Snap’s share price is down around 83 per cent since September 2021, and has fallen 70 per cent so far in 2022.

Financial oberservers say that concerns about inflation, interest rates, supply chains and Russia’s continuing war in Ukraine has caused advertisers to rethink their spending, according to CNBC.

The decline also saw significant sell-off across the advertising and ad-tech space, reported Bloomberg.

“At this point, our sense is this is more macro and industry-driven versus Snap specific,” Piper Sandler analyst Tom Champion wrote in a note according to the news service.