Social media stocks plummeted after Snap said the economy had worsened faster than expected in the last month and the social media company slashed its quarterly forecast.
The announcement sent Snapchat’s parent company Snap plunging more than 40% Tuesday, hitting their lowest level since March 2020.
“The macro environment has deteriorated further and faster than we anticipated when we issued our quarterly guidance last month,” Spiegel said, sending a shock across the digital ad industry.
Snap’s woes dragged down the shares of many rivals. Facebook and Instagram owner Meta fell nearly 8%, Pinterest plunged more than 20% while YouTube and Google parent Alphabet lost 5%.
Twitter also fell 5% adding further uncertainty to the company. After Tesla CEO Elon Musk said he was buying the social media platform Twitter’s stock is now down nearly 35%.
Investors in social media stocks are clearly nervous that advertisers may be pulling back on marketing spending due to a growing list of concerns on the global economy.
Snap Chief Executive Evan Spiegel told employees in a memo seen by Reuters that the company will slow hiring for this year and laid out a broad slate of problems.
“Like many companies, we continue to face rising inflation and interest rates, supply chain shortages and labor disruptions, platform policy changes, the impact of the war in Ukraine, and more,” he wrote.