(Bloomberg) — US social-media giants were on course to shed nearly $69 billion in market value on Thursday, as disappointing revenue from Snap Inc. raised concerns about the outlook for online advertising.
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The Snapchat parent plummeted 28% in trading before the bell. Facebook parent Meta Platforms Inc. shares fell 4.7%, while shares of Google owner Alphabet Inc. and Twitter Inc. slipped about 2.5%.
The losses mark the second major sector selloff sparked by Snap in two months, as its results become a barometer for investors trying to decipher how economic uncertainty has impacted ad spending. There are growing signs that tech companies are preparing for a recession with some pulling back on hiring, while Meta has lost about half of its value this year after disappointing revenue forecasts.
“The earnings optimism may come to a pause for now,” said Tina Teng, a markets analyst at CMC Markets Plc. in Auckland. “Snap’s miss on earnings expectations indicates the severe challenges facing its tech peers, typically on social platforms such as Meta Platforms.”
Snap — which saw $6 billion in market cap erased after hours on Thursday — didn’t issue financial guidance for the third quarter, except to say that revenue so far in the period is about flat compared with last year. Management also reiterated it plans a “substantially reduced rate of hiring,” echoing plans by Apple Inc. and others.
Vital Knowledge called the results from Snap and hard-disk-drive maker Seagate Technology Holdings Plc “awful” and “ugly.” Already battered tech stocks may face more pressure as earnings season ramps up next week.
READ: Snap Growth Muted Through 2023 on Uncertainty: Bloomberg Intelligance
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“With more and more mega-cap tech companies planning to slow hiring and downgrade their growth expectations, the economic outlook is certainly not in good shape,” CMC’s Teng said.
(Updates share moves throughout.)
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