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The Snapchat parent fell 28% in pre-bell trading. Facebook parent company Meta Platforms Inc. Shares fell 4.7%, while Google owner Alphabet Inc. and Twitter Inc. Shares fell about 2.5%.
The losses marked the second major sector selloff prompted by Snap in two months, as the results became a barometer for investors trying to understand how economic uncertainty has affected ad spending. With Meta losing half its value this year after disappointing earnings forecasts, there are growing signs that tech companies are preparing for the recession by pulling back on some hiring.
“Revenue optimism may be on hold for now,” said Tina Deng, market analyst at CMC Markets Plc in Auckland. “Snap’s miss on revenue expectations is indicative of the serious challenges facing its technology peers, typically on social platforms like MetaPlatforms.”
Snap — which wiped out a $6 billion market cap after hours on Thursday — did not provide financial guidance for the third quarter, other than to say revenue so far in the period was flat compared with last year. Management reiterated that it plans a “significant rate of hiring” that echoes plans from Apple Inc and others.
Core Knowledge called Snap and hard-disk-drive maker Seagate Technology Holdings Plc’s results “bad” and “ugly.” As earnings season ramps up next week, already battered tech stocks could face more pressure.
Read: Snap Growth Stunned in 2023 Amid Uncertainty: Bloomberg Intelligence
“As more and more mega-cap tech companies plan to slow hiring and lower their growth expectations, the economic outlook is definitely not looking good,” said CMC’s Deng.
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