Social media lost more than $ 135 billion in market value on Tuesday after Snapchat’s pessimistic forecasts. We are facing dark times for companies that depend on online advertising.
Snapchat sneezes and all social networks catch a cold. Snap, the company behind the social network with a small spirit, very popular among teenagers, has to revise its forecasts downwards. In April, after missing analysts’ expectations, the group said it expected revenue growth of between 20 and 25 percent year-on-year and projected operating profit of between $ 0 million and $ 50 million. “We think we will reach the lowest level of guidelines we announced in April”explained Evan Spiegel, CEO of Snap.
“Since we released our quarterly forecasts on April 21, the macroeconomic environment has deteriorated faster and sharper than expected,” the California-based company said in a document submitted to the US Stock Exchange, the SEC. “As a result, it is likely that our revenues and our gross operating surplus will be below (…) our forecasts,” continued the founder of Snapchat.
According to its leaders, Snap, like other companies, suffers from rising inflation and interest ratesdifficulties in the supply chain – which is harder to understand – and the macroeconomic consequences of the war in Ukraine.
Apple, the executioner of technology stocks?
The platform, very popular among young people, still suffers from cchange in Apple policy, which requires application publishers to obtain user consent before tracking them in their navigation to collect data for advertising targeting purposes. And she suffers fierce competition from the Chinese social network TikTok on its primary target, teenagers.
All this affects Snap’s ad revenue. And the entire technology sector makes a living from online advertising, keeping in mind social networks, which stumble on the carpet. Meta (Facebook), Twitter, YouTube (Google) and Pinterest bear the brunt of the global context that is urging advertisers to revise their downward investment in advertising.
“The macroeconomic environment has deteriorated faster and sharper than expected.”
However, a company like Snapchat has continued to show good growth in the number of users so far, which is not the case for all its competitors. But recently it was noticed by the social network “yellow flash”. small erosion of this growthstill attracts 332 million daily active users. Consecutive closures increased the numbers, which returned to more classic growth.
Social networks strive for thatattract new members to offer major advertising goals to their advertisers. In February, Meta, Facebook’s parent company, announced the biggest one-day stock market loss ever by the U.S. company after saying consumer growth had stalled.
After reporting a negative outlook for Snapchat, they are all social networks that are gray. There are widespread concerns about the technology sector, and social media in particular. The increase in the US Federal Reserve’s interest rate has a particular impact on technology stocks, which regularly need new money and are valued based on future growth forecasts. Total this Tuesday, social media platforms lost $ 135 billion in value in one trading session.
As a direct consequence, Snapchat will slow down their staffing obligations. The social network will employ only 500 people this year, while it recruited 2,000 last year.
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- Snapchat lowered its revenue forecasts, dragging all social networks with it into the historic stock market crash.
- Apple’s new advertising rules and international geopolitical context have been identified as the causes of declining social media revenue.
- Depending on the revenue from online advertising, they will all go through tough months.