Shares of Meta Platforms, Alphabet, a company that owns Google, and other businesses that sell online advertising fell late on Thursday after Snap Inc. (SNAP.N), the company that owns Snapchat, cited inflation as the reason for its weakest revenue growth since coming public five years ago.
The first large social media firm to announce its September quarter profits was Snap, and after the bell the dismal numbers caused its stock to fall 25%. Snap forewarned that the typically busy Christmas quarter wouldn’t see any revenue increase.
Shares of other businesses that sell online advertising also decreased, with Pinterest (PINS.N) falling close to 8%, Facebook owner Meta (META.O) losing approximately 4%, Alphabet (GOOGL.O) losing 2%. Over $40 billion in stock market value from those and other online ad firms, such as Spotify (SPOT.N) and Roku, was lost overall as a result of the sell-off in late trading (ROKU.O).
The warning from Snap follows sharp declines in social media company stock prices, with Meta’s stock down almost 60% year to date and Pinterest’s stock down almost 40%.
Snap’s stock, which was last trading at around $8 per share, has now dropped 90% from the closure of its all-time high in September 2021. In a highly anticipated initial public offering in 2017, Snap made its stock market debut with a $17 stock price.
In a letter to investors, Snap said that several sponsors had cut their marketing spending due to inflation.
The third quarter’s revenue, which concluded on September 30, increased by 6% to $1.13 billion. According to Refinitiv, the amount only barely fell short of analyst projections of $1.14 billion.
In an effort to reduce expenses and brace itself for a weakening economy, the business said in August that it will fire 20% of its staff and halt initiatives including gaming and a flying camera drone.
On Tuesday, Alphabet releases its quarterly earnings, and on Wednesday, Meta.
