logologologologo
  • Home
  • Business
  • Markets
  • Exchange
  • Investment
  • Personal Finance

Snap shows ad market’s nightmare ‘becoming a reality’: Morning Brief

Snapchat (SNAP) had its worst day ever on Tuesday.

Shares of the company fell 43% after messaging to shareholders that the “macroeconomic environment” would weigh on earnings in the current quarter.

Big tech giants like Amazon (AMZN), Alphabet (GOOGL), Apple (AAPL), and Meta (FB), all saw their shares fall in Tuesday’s trading session. Even though Snapchat is only a fraction the size of these companies, something about the updated guidance spooked tech investors in what has already been a bloody 2022 for those stocks.

For a possible answer, we need look no further than BofA Global Research’s note on Tuesday entitled, “Ad recession concerns becoming a reality.” The thesis: the base of advertisers paying Snapchat for pre-roll ads or integrated content is the same base of advertisers paying Google. Or Pinterest (PINS). Or the company formerly known as Facebook.

“[W]e expect a sentiment overhang on the Internet group until 2Q earnings in July,” the note reads. Analysts at Jefferies echoed this view, arguing in a note Tuesday that they believe it’s “highly unlikely” ad market weakness is isolated to Snap.

This “overhang” led the Nasdaq (^IXIC) to slide 2.3% on Tuesday, extending a 2022 market sell-off triggered by economic shutdowns in China, the war in Ukraine, and, of course, the Fed pulling the punch bowl. The tech index is now at its lowest level since November 2020.

Snapchat’s other problem? It isn’t the amount of users on the app that spooked investors — the company handily beat Wall Street’s estimates on global daily active users last quarter, reporting 332 million as of March 31. Rather, it’s all about the cash, a theme we’re hearing from once growth-obsessed companies.

If “macroeconomic environment” means fears of a recession, then the concern is a drying up of advertising dollars that keep the lights on at Snapchat — not how many people are using dog ear filters.

But Snapchat is no stranger to dramatic ups and downs in its stock price. And interestingly, those swings have been closely tied to the market read on its much larger social media peers as well.

In February, Meta reported poor revenue guidance and blamed privacy changes to Apple’s iOS mobile system. Snapchat shares lost 20%. What happened after the bell? Snap reported its own earnings, said it had achieved a net profit for the first time, and shares about doubled the next day.

How about the quarter before that? The company missed on revenue expectations, teased the impact of the iOS changes, and then the stock sold off by 25%.

Call it the “macroeconomic environment” or “something about iOS,” the story for these companies hinges less on user counts than it does on the ad dollars.

Especially in a fragile financial environment where the word “recession” is floating around, cash is far from trash — it is a survival strategy for tech companies that are apparently making the transition from “growth” to “value.”

Related posts

March 24, 2023

TikTok CEO fails to convince Congress app is safe


Read more

Categories

  • Business
  • Content
  • Crypto
  • Exchange
  • Inflation
  • Investment
  • Markets
  • Personal Finance
  • Technology
  • Uncategorized

Archives

  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021

Recent Posts

  • TikTok CEO fails to convince Congress app is safe
  • Deutsche Bank and UBS shares hit as banking fears keep tight grip
  • SEC sues Tron founder Justin Sun, Lindsay Lohan, other celebrities over crypto sales
  • Employees are checked out at work more than at any time in history — and it makes no difference if they work from home or not. Here’s why
  • Rolls-Royce ‘Wraith Black Arrow’ marks end of V12 coupe era

About Us

The Alpha Cut a Vida Street LLC Company
1404 N. Ronald Reagan Blvd.
Suite 1120
Longwood, FL 32750

Link

(843) 256-4375
https://thealphacut.com

Why Us

Terms & Privacy
Policy & Procedure
Disclaimer

This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only.
Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.
All data in this communication is provided for informational purposes only and is not intended for trading or investing purposes. We expressly disclaim the accuracy, adequacy, or completeness of any data and content provided by financial exchanges, individual issuers, their respective affiliates and business partners and shall not be liable for any errors, omissions or other defects in, delays or interruptions in such data, or for any actions taken in reliance thereon. You agree not to copy, modify, reformat, download, store, reproduce, reprocess, transmit or redistribute any data or information found herein or use any such data or information in a commercial enterprise without obtaining our prior written consent.
We make no express or implied warranties or representations and shall have no liability whatsoever with respect to any data contained herein. The data may not be further redistributed or used to create indices or other financial products. This report and the views expressed herein are subject to change at any time based upon market or other conditions (such as domestic and global economic trends) and are current as of the date of publication hereof. The information, analysis, and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual or entity.
We emphasize that Investment in the securities of smaller companies can involve greater risk than is generally associated with investment in larger, more established companies, and can result in significant capital losses that may have a detrimental effect on the value of your investments.
Forecasting represents predictions of market prices and/or volume patterns utilizing varying analytical data. It is not representative of a projection of the stock market, or of any specific investment.
Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment. The general information contained in this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional.
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth.As with any structuring of a portfolio of investments, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
The information, analysis and opinions expressed herein are for general, impersonal information only and are not intended to provide specific advice or recommendations for any individual entity.

copyright © Alpha Cut 2021. All Right Reserved
The Alpha Cut a Vida Street LLC Company