Shares of Meta Platform, Google parent Alphabet and other listed companies selling digital advertising in the United States all fell on Thursday after Snapchat owner Snap blamed inflation for the slowest revenue growth since it went public five years ago, according to reports.
Snap is the first major social media company in the US to report quarterly earnings. But Snap shares plunged 25% after the earnings report. As Snap warned that its revenue would not grow during the typically busy holiday season.
Shares of other U.S. companies that sell Internet advertising also fell, with Facebook-parent Meta down about 4%, Alphabet down 2% and Pinterest down nearly 8%. Those companies, along with other Internet AD companies like Spotify and Roku, collectively saw more than $40 billion wiped off their stock value in late trading.
Snap's warning comes after shares of U.S. social media companies have already fallen sharply, with Meta down about 60% this year and Pinterest down nearly 40%.
Snap's stock, which last traded around $8 a share, is now down 90% from its all-time closing high in September 2021. Snap went public in a highly anticipated initial public offering in 2017, priced at $17.
In a letter to investors, Snap said inflation had caused some advertisers to cut marketing budgets.
Revenue for the third quarter was $1.13 billion, up 6% from a year earlier. That was slightly below analysts' expectations of $1.14 billion, according to Refinitiv.
In addition, Snap announced in August that it would lay off 20% of its workforce and discontinue programs such as gaming and flying cameras in an effort to cut costs and stay strong in a worsening economy.
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