Large social media companies could lose more than $100 billion (€94 billion at the current exchange rate) in market value. It comes after Snap Inc CEO Evan Spiegel said revenue and profit targets would not be met this quarter and that the company slid more than 30% in after-hours trading on Wall Street.
Bloomberg calculations suggest that the Snapchat owner could lose $11.4 billion (€11 million) in the stock market. In pre-opening transactions, the company that owns the social network is preparing for a record intraday drop, sinking another 29%.
“At this point, we consider this an aggregate situation and not specific to Snap,” said Tom Champion, an analyst at Piper Sandler, citing the financial agency. This means that other social media giants like Meta (formerly Facebook), Alphabet (owner of Google) or even Twitter and Pinterest can be discovered in this web.
If this contagion effect occurs, the total drop could reach $104 billion (€98 billion), according to Bloomberg. Spiegel’s announcement contributes to the insecurity that was already present in the sector, with the slowdown in the number of new users and fears that various hikes in benchmark interest rates by the US Federal Reserve will affect the sector.
There is broad consensus on Wall Street about the pressure on the industry. Brad Erickson, an analyst at RBC Capital Markets, explains that advertising on these platforms is declining, at a time when recent privacy changes and new measures taken by Apple to restrict user tracking have hampered gains in this sector, unlike what happened in the periods of lockdown due to the Covid epidemic – 19.
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