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Snapchat warns of bad ad market: Stocks drop 43% in one day

Social media giant Snapchat tumbled by 43% on Tuesday after the company’s CEO warned of the ever-deteriorating digital online advertising landscape.

CNBC warned that the online advertising landscape in Ukraine continues to deteriorate due to a variety of factors, including inflation-induced digital ad spending cuts, supply chain issues and the ongoing war, Snap CEO Evan Spiegel warned on Monday.

© GETTY/AFP Drew Angerer

Spiegel warned that the online advertising space has deteriorated again since his company reported its quarterly results in April, when it posted disappointing numbers. Now Spiegel has caused major upheaval in the digital advertising industry, and some investors have fled after saying that “the macro environment has deteriorated and is faster than we expected when we released our quarterly guide last month.”

Snap lost 43.1% of market cap on Tuesday. In addition, Pinterest lost 23.6%, Facebook 7.6%, Google 5% and Twitter 5.6%.

Analysts at JMP Securities wrote in a note following Snap’s announcement: “It is likely that all digital advertising will overcome macroeconomic factors.” They added that as companies curb their advertising budgets, brands’ budgets are “at greater risk of shrinking”, but that direct responsive ads that encourage users to take immediate action are more associated with spending by consumers, especially e-commerce.

Stifel analysts wrote that direct intervention campaigns are “probably starting to suffer a little bit from inflationary pressures,” noting that Snap is “more of a DR than a brand right now.”

Analysts at Atlantic Equities believe the broader market concern is justified in the wake of Spiegel’s announcement. “Just one month after the guideline was published, it appears to underline the current rapid changes in fundamental economic conditions that could have adverse effects for online advertising competitors and the entire internet industry,” Atlantic said. analysts. Stocks. . “Snap’s warning is clearly negative for all ad-supported peers.”

Read more about CNBC here.

Source: Breitbart

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