Snap stock crashed Tuesday as the company lowered an outlook it initially issued April 21, saying the macroeconomic environment has deteriorated further and faster than anticipated. The report by Snap brought down other social media stocks.
"We believe it is likely that we will report revenue and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) below the low end of our Q2 2022 guidance range," Snap said in a written statement released late Monday.
Snap stock plummeted 43%, closing at 12.79 on the stock market today. The stock fell to its lowest level in two years.
Snap currently has about 332 million users of its smartphone app, called Snapchat. Like other tech companies, Snap is facing rising inflation and interest rates and supply-chain shortage. There's also a negative impact from the war in Ukraine.
Snap's warning weighed on online peers that rely on advertising. Facebook parent Meta Platforms sank 7.6% to 181.28. Google parent Alphabet dropped 5% to 2,119.40, while Twitter retreated 5.5% to 35.76.
TWTR stock continues to fall from Tesla Chief Executive Elon Musk's $54.20 takeover price. And online advertising firm Trade Desk cratered 18.5% to 42.78. Pinterest stock plunged 23.6% to 17.25.
Estimates Lowered On Snap Stock
Jefferies analyst Brent Thill lowered estimates across digital advertising, saying there was "no visibility."
As a result of the broader ad slowdown, Thill cut revenue estimates on Facebook, Google, Snap, Twitter and Trade Desk.
"We expect other digital advertising companies to report ad revenue softness," Thill wrote in a note to clients. "It is highly unlikely that the weakness is isolated to SNAP."
RBC Capital Markets analyst Brad Erickson slashed his price target on Snap stock to 17, from 35.
Snap Misses On First-Quarter Results
Snap reported first-quarter results on April 21 that showed a small miss on the top and bottom lines, but came with a warning.
"The first quarter of 2022 proved more challenging than we had expected," Snap Chief Executive Evan Spiegel said in written remarks with the company's earnings release.
"While our revenue continues to grow year-over-year, it is growing more slowly than we expected at this time," Spiegel said.
"We remain excited about the long-term opportunity to grow our business," the company said. "Our community continues to grow, and we continue to see strong engagement across Snapchat, and continue to see significant opportunities to grow our average revenue per user over the long term."
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
