- Snap Inc (SNAP) shares were trading 41.59% lower to US$13.125 at 1:44 pm ET on Tuesday.
- The selloff comes after it said it might miss the revenue and profit targets in the ongoing quarter
- In the first quarter of fiscal 2022, Snap’s revenue surged 38% YoY to US$1,063 million.
Shares of social media company Snap Inc (SNAP) nosedived more than 40% on Tuesday after it warned that it might miss its revenue and profit targets set just about a month ago for the current quarter.
Snap Inc’s bleak forecast triggered a sector-wide selloff. Shares of Meta Platforms Inc (FB), Pinterest (PINS), Twitter Inc (TWTR) and Google-parent Alphabet (GOOGL) also fell sharply. FB declined more than 8.5%, PINS fell over 24%, TWTR dropped 6.4%, and GOOGL sank 5.8% at 2:49 pm ET on Tuesday.
Reuters estimated that Snap could lose up to US$15 billion in market value from Tuesday’s stock rout, and the broader social-media and ad segment may take a US$200 billion hit in market capitalization.
The selloff comes after the Santa Monica-based company on Monday said that it may miss the revenue and profit targets in the ongoing quarter and may be forced to cut hiring and spending.
In the first quarter of fiscal 2022, Snap’s revenue surged 38% YoY to US$1,063 million. But net loss widened to US$360 million from US$287 million in the year-ago quarter.
Presenting the March quarter report on April 21, Snap Inc CEO Evan Spiegel highlighted the “challenging operating environment” during the quarter.
Its operating cash flow decreased to US$127 million from US$137 million in the prior year. The free cash flow also declined to US$106 million from US$126 million in the corresponding period of 2021.
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Snap’s grim outlook underscores prevailing uncertainties
Snap Inc’s grim outlook underscores the prevailing economic and geopolitical uncertainties, from the Ukraine war, red-hot inflation, and rising interest rates to supply bottlenecks.
Snap Inc (SNAP) shares were trading 41.59% lower to US$13.125 at 1:44 pm ET on Tuesday.
At a tech conclave on Monday, Spiegel said that “there’s a lot to deal with” in the current situation.
Snap Inc’s 18% year-over-year growth in daily active users (332 million) and modest revenue growth in the March quarter prompted the company to boost its guidance for the current quarter.
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Analysts expect the bearish trend to continue in the market in the coming days. Tech and other growth stocks bore the brunt of the negative market forces.