We saw it last week with Target and the retail sector, and now a shock at this social media star is being felt across the tech sector.
Shares in Snap (NYSE:SNAP), which owns Snapchat, were 31% lower after the closing bell, having warned that the economic environment has deteriorated further and faster than anticipated.
The camera company warned that revenues and adjusted earnings are now likely to be below the low end of its second-quarter guidance range. Facebook owner Meta Platforms (NASDAQ:FB) fell 7%, while Elon Musk takeover target Twitter (NYSE:TWTR) dropped 4%, Google owner Alphabet (NASDAQ:GOOGL) eased 3% and Amazon (NASDAQ:AMZN) dropped 2% in after-hours trading last night.
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The latest reversal in fortunes for technology companies after the lockdown-fuelled boom of the previous two years left Nasdaq futures pointing more than 1% lower today. As well as greater economic uncertainty, the industry is now under pressure from rising costs, supply chain shortages and a tight labour market.
Snap boss Evan Spiegel, pictured above, highlighted these factors in a memo to staff last night, as well as the Ukraine war and platform policy changes after Apple (NASDAQ:AAPL’s new iPhone privacy rules forced apps to get permission from users for advertising tracking.
Snap had previously forecast revenue growth of between 20% and 25% for the current quarter, which is on top of the 100%-plus rise seen for the same period a year earlier.
Spiegel said bosses had been asked to find additional cost savings, although the company said it will continue to recruit additional staff this year.
Snap, which last updated investors at its first-quarter results on 21 April, added: “We remain excited about the long-term opportunity to grow our business.
“Our community continues to grow, and we continue to see strong engagement across Snapchat, and continue to see significant opportunities to grow our average revenue per user over the long term.”
Despite Snap’s longer-term optimism, the increased worries that companies are looking to tighten their advertising budgets in response to higher costs and the uncertain outlook put pressure on some London-listed shares today.
ITV shares fell 2.76p to 71.60p, leaving the broadcaster in danger of relegation when the next quarterly FTSE 100 reshuffle completes in June. Shares were above 120p in February but have come under pressure since plans were announced for ad-funded streaming service ITVX.
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When ITV last updated on trading on 11 May, it said total advertising revenues rose 16% for the first three months of 2022 amid good demand across most sectors.
However, it warned that comparatives would get much tougher in the second and third quarters and that it was “mindful of the macroeconomic and geopolitical uncertainty”.
The jitters over potential advertising caution also sent WPP shares 29p lower at 936.4p. At the end of April, the advertising and marketing agency giant said 2022 had started well as it raised its annual like-for-like revenues growth guidance to between 5.5% and 6.5%.
Boss Mark Read reported healthy growth across all businesses and regions: “Demand is strong for our services, particularly in digital media, e-commerce, data and marketing technology.”
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