Social media stocks fall after dismal Snap earnings as investors fret over ad sales slowdown
- Snap's second quarter earnings bomb sparked a sell-off in shares of Meta and other social media stocks.
- Snap reported $1.1 billion in revenue, short of expectations for $1.14 billion.
Shares of social media companies were dropping Friday following Snap's dismal second-quarter earnings report after the bell on Thursday.
Snap stock was down 36%, trading at $10.41 as of 10:36 a.m. ET, dragging shares of Meta and Pinterest lower with it as investors fear a widespread slowdown in online advertising sales. Facebook's parent company was down nearly 6%, to $172.28, while Pinterest was trading at $18.43, lower by about 12%. Google parent Alphabet, another bellwether for online ad revenue, fell 3%.
The social media sector is reeling from Snap's disappointing second quarter earnings, where it reported $1.11 billion in revenue against expectations of $1.14 billion. Earnings per share fell $0.02 compared to projections of a loss of $0.01, and the company said it would slow hiring and would not offer guidance for the coming quarter. With Friday's steep drop, the stock has slid over 75% in 2022.
Snap admitted its disappointment in its earnings: "We are not satisfied with the results we are delivering, regardless of the current headwinds," the company said in an investor letter, citing low demand from advertisers as well as inflationary pressures. The company added that it would continue to make cuts to its hiring budget and operational expenses, but would not release any guidance for third quarter figures as "forward-looking visibility remains incredibly challenging."
Social media has been particularly hard hit among tech shares, as predictions of an economic slowdown lead to lower spending by advertisers. Meta's first quarter earnings shocked investors, and the subsequent sell-off in early February was the single biggest loss of market capitalization in stock market history.