Social media companies were already having a rough year from the cutback in digital ad spending caused by rising inflation, supply chain challenges and the war in Ukraine. Forecasts for the second quarter called for meager growth at best, and stock prices were getting hammered.
That was all before Snap CEO Evan Spiegel warned late Monday of an environment that’s worsened since his company reported quarterly results in April, when guidance was already disappointing.
In telling employees and Wall Street that “the macro environment has deteriorated further and faster than we anticipated when we issued our quarterly guidance last month,” Spiegel sent a shock across the digital ad industry and sent investors running for the exits.
Snap, which had previously projected second-quarter growth of 20% to 25%, lost an astounding 40% of its market cap on Monday. Beyond that, Pinterest plunged 23%, Facebook parent Meta dropped 8%, Google lost 6% and Twitter sank almost 4%.