Disclaimer on Social Media and Digital Ads

By Will Feuer

Shares of social media and digital ad companies took a hit in premarket trading as investors digested a mid-quarter warning from Snap Inc., which said adjusted revenue and earnings were likely to be lower than expected. projections he had published about a month earlier.

Macroeconomic conditions have deteriorated “more and faster” than expected since the company released its guidance for the current quarter, Chief Executive Evan Spiegel told a JP Morgan Chase & Co. conference on Monday, saying fear a slowdown in digital advertising.

Spiegel cited a range of issues, from rising inflation to changes to Apple Inc.’s privacy policy, to the impacts of the war in Ukraine and other factors.

The warning sent shares of other social media and digital advertising companies plummeting. Shares of Meta Platforms Inc., owner of Facebook and Instagram, were more than 7% lower premarket, while shares of Twitter Inc. fell nearly 4%, now around 40% below the $54.20 per share that Elon Musk originally agreed to pay for the company. .

Shares of Pinterest Inc. fell more than 13% in premarket trading and Google parent company Alphabet Inc. traded nearly 4% lower. Shares of ad-buying platform The Trade Desk Inc. were nearly 8% lower. Shares of Roku Inc. fell nearly 5%.

Shares of Snap were the hardest hit, falling nearly 30% to $15.93 per share and wiping out nearly all of the company’s pandemic gains.

KeyBanc analysts warned in a research note that while Snap’s warning about the macro environment is notable, some of the issues may be unique to Snap. For example, they said, Snap’s younger user base may be more susceptible to inflation than users at other social media companies.

“Given that Snap represents a low single-digit percentage of industry ad revenue, we view the Q2 guidance update as a warning signal, but not a wake-up call for the whole industry,” the analysts said.

Analysts said big companies like Meta and Alphabet likely face lower risk in a deteriorating macro environment, while Twitter and Pinterest could be among the most vulnerable right now.

Analysts cut their price target on Snap to $27 per share from $45 per share.

Write to Will Feuer at [email protected]