Social Media, Digital Ads Stocks Fall on Snap Warning
By Will Feuer
Shares of social media and digital advertising companies took a
hit in premarket trading as investors digested a mid-quarter
warning from Snap Inc., which said revenue and adjusted earnings
would likely come in below the projections it issued about a month
Macro conditions have deteriorated "further and faster" than
expected since the company issued its guidance for the current
quarter, Chief Executive Evan Spiegel said Monday at a JP Morgan
Chase & Co. conference, sparking fears of a digital advertising
Mr. Spiegel cited a range of issues, from rising inflation to
Ukraine and other factors.
The warning sent shares of fellow social media and digital
advertising companies tumbling. Shares of Facebook and Instagram
owner Meta Platforms Inc. were more than 7% lower in the premarket,
while Twitter Inc. stock fell almost 4%, now about 40% lower than
the $54.20 a share that Elon Musk initially agreed to pay for the
Pinterest Inc. stock fell more than 13% in premarket trading and
Google parent Alphabet Inc. traded almost 4% lower. Shares of
ad-buying platform The Trade Desk Inc. were almost 8% lower. Roku
Inc. stock fell almost 5%.
Shares of Snap were hit the hardest, falling almost 30% to
$15.93 a share and eliminating nearly all of the company's pandemic
Analysts at KeyBanc cautioned in a research note that while
Snap's warning on the macro environment is notable, some of the
issues may be unique to Snap. For example, they said, Snap's
younger user base may be more sensitive to inflation than the users
of other social media companies.
"Given Snap is a low-single-digit percentage of industry ad
revenue, we view the 2Q guidance update as a cautionary flag but
not one to sound the alarm on the entire sector," the analysts
The analysts said larger companies like Meta and Alphabet likely
face lower risk in a deteriorating macro environment, while Twitter
and Pinterest may be among the most vulnerable right now.
The analysts cut their price target on Snap to $27 a share from
$45 a share.
Write to Will Feuer at Will.Feuer@wsj.com
(END) Dow Jones Newswires
May 24, 2022 06:45 ET (10:45 GMT)
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