An unexpected warning about the deteriorating economy by Snap Inc. Chief Executive Evan Spiegel rippled through internet and social-media stocks late Monday, potentially ruining the market’s comeback attempt from earlier in the day.
After the market closed with strong gains Monday, Spiegel spoke at a JP Morgan technology conference, and the company stated in a regulatory filing that its second-quarter earnings would come in below its prior estimates. At the conference, Spiegel said the economy has ”definitely deteriorated further and faster” than Snap
had expected when it gave its forecast during its earnings call last month. He added that the Snapchat parent is slowing its hiring pace for the year and looking for ways to cut costs.
Shares of Snap tumbled more than 30% in after-hours trading, and the stocks of other internet and social-media companies fell along with it: Alphabet Inc.
slipped 3.6%, Facebook parent Meta Platforms Inc.
tumbled 7%, Pinterest Inc.
fell 12%, and Twitter Inc.
lost an additional 3.7%, after a roller-coaster ride last week as Elon Musk claimed his deal to buy the company was on hold.
Spiegel said Snap, like many other businesses, was dealing with supply-chain issues, inflation, concerns about interest rates and the war in Ukraine. “There’s a lot to deal with in the macro environment today, but we’re staying focused and really on the long term and investing through it,” he said.
The comments by Snap could be an indication of further deterioration in the internet sector, with an overall internet advertising slowdown as the macro economy slows. It’s worth noting that last year, when the impact of Apple Inc.’s
privacy changes was felt on platforms that depended on ad revenue, it turned out that Snap and Facebook were the hardest hit by those changes.