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 slowest revenue growth since coming public five years ago.
The first large social media company to announce its September quarter profits was Snap, and after the bell the disappointing numbers caused its stock to fall 25%. Snap forewarned that the typically busy holiday quarter wouldn’t see any revenue growth.
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%.
These and other internet ad firms, such as Spotify (SPOT.N) and Roku, collectively lost almost $40 billion in stock market value due to the sell-off in late trading (ROKU.O).The warning from Snap follows already significant declines in the value of social media company shares, with Meta’s value down over 60% year to date and Pinterest’s value down almost 40%.
Investors are concerned that the aggressive interest rate increases being implemented by the U.S. Federal Reserve in an effort to curb decades-high inflation could badly harm the economy.
Snap’s stock was last trading at under $8 per share, down 90% from its previous record-breaking level in September 2021. In 2017, Snap made its debut on the stock market with a highly anticipated IPO that set the price of its stock at $17.