Snap shares sank nearly 26% in premarket trading on Friday, after the company’s forecast of zero revenue growth.
Tech giants Alphabet, Meta and Pinterest fell between 2% and 7% dragged by Snap, as a tightening advertiser budgets in an uncertain economy is still impacting social media companies in Wall Street.
Snap reported revenue of $1.13 billion for the three months ending in September, which represents a 6% increase from the year before and less than expected by analysts.
Snapchat’s parent company said its revenue growth was slowed by a growing competition and investors cautious on the social media business changing landscape.
“We are finding that our advertising partners across many industries are decreasing their marketing budgets, especially in the face of operating environment headwinds, inflation-driven cost pressures, and rising costs,” the company said in the letter to investors Thursday.
So far this year Snap’s stock has lost about 77% of its value, while YouTube parent Alphabet, Facebook parent Meta and Pinterest have lost between 30% and 60%.
Fast-growing competitors like TikTok are rattling the industry. Digital ad companies have together lost near $1 trillion in value, as the industry also faces new challenges from Apple’s privacy changes that will allow users to block data tracking.
Twitter also slid 8% after Snap’s results. Twitter has gained 21% on the possibility of Musk buying the company.