Snap's Record Rout Leads $142 Billion Social-Media Selloff

  • In Business
  • 2021-10-22 20:52:18Z
  • By Bloomberg

(Bloomberg) -- Snap Inc. posted its biggest one-day drop on record after the Snapchat parent company warned that Apple Inc.'s data collection rules and global supply-chain bottlenecks are weighing on advertising spending.

Most Read from Bloomberg

  • The Top Money Maker at Deutsche Bank Reaps Billions From Singapore

  • Why Americans and Britons Are Rushing to Buy Idyllic Homes in Italy

  • Cities' Answer to Sprawl? Go Wild.

  • Forget Palm Springs-Santa Fe Is the New Mecca for Modern Architecture

  • One of California's Wealthiest Counties Could Run Out of Water Next Summer

The stock tumbled 27%, wiping out about $32 billion of a market value that now sits around $89 billion. The cautious outlook cast a shadow over ad-dependent peers, including Google-owner Alphabet Inc., Facebook Inc., Twitter Inc. and Pinterest Inc., which fell between 3% and 5% each.

All together, Snap's warning erased about $142 billion of market value from the company and peers on Friday. Investors are bracing for Snap's challenges to be felt industrywide, with Alphabet, Facebook and Twitter due to report quarterly results next week.

The S&P 500 Index snapped a seven-day streak of gains on Friday. Federal Reserve Chair Jerome Powell's comments around rising inflation risk added to investor concern regarding Snap's impact on technology shares.

"You bring those two themes together, and I think that's spooked the market going into next week with earnings," Jonestrading Chief Market Strategist Michael O'Rourke said in an interview.

"Management almost couldn't have sounded worse around the effects this is having," Brad Erickson, analyst at RBC Capital Markets, wrote in a note on Snap. Sticking to his outperform rating on the stock, Erickson said the credibility of the company's leadership may have been permanently damaged, though he remains bullish on long-term growth prospects.

Speaking on a post-earnings call with analysts, Chief Executive Officer Evan Spiegel said data collection rules introduced by Apple have made it difficult for advertisers to measure and manage their ad campaigns. Snap expects adjusted earnings before interest, tax, depreciation and amortization of $135 million to $175 million in the last three months of 2021, much lower than the $299.3 million forecast from Wall Street.

Facebook, Twitter

Earlier this year, Apple started requiring all apps on its iOS 15 platform to get iPhone users' permission to be tracked for advertising purposes. Analysts are warning that the impact could be long lasting, while supply-chain snags at Snap's advertising partners are most likely to be transitory.

Morgan Stanley's Brian Nowak said he sees the impact from Apple's privacy changes hurting Facebook's revenue by low-to-mid single-digit percentages. He expects Twitter to be weighed down more in the next two years as the changes hurt the micro-blogging company's "multi-year bull case."

Facebook Sinks as Analysts Debate Snap Readthrough: Street Wrap

Though Snap could face the worst impact among peers from Apple's changes, JPMorgan analyst Doug Anmuth said Facebook's profile looks similar. For Google, supply bottlenecks are more of a concern, he said.

Snap said its advertising partners across a variety of industries are facing supply-chain disruptions and labor shortages. This is occurring at a time when these partners would normally be operating at peak capacity, generating the strongest and most valuable quarter for ad revenue. But marketers can't advertise for products they can't sell.

(Updates stock moves, market value losses and chart.)

Most Read from Bloomberg Businessweek

  • Colombia's Rain Shaman Got Paid to Stop the Storms, Until He Couldn't

  • How Donald Trump, Elon Musk, and Gwyneth Paltrow Short-Circuit Your Ability to Think Rationally

  • These Out-of-Work Americans Tell Us Job Market Turmoil Is Anything But Transitory

  • What My Brain Scan Revealed About the Science of Persuasion

  • Jane Fraser Has a Plan to Remake Citigroup While Tormenting Rivals

©2021 Bloomberg L.P.


More Related News

Canada's Economy Cranks Out 154,000 Jobs, Quadruple Expectations

(Bloomberg) -- Canada's labor market blew past expectations in November as the end of income support programs helped fuel new hiring.Most Read from...

Kaisa Swap Rejected, Developer Bonds Slide: Evergrande Update
Kaisa Swap Rejected, Developer Bonds Slide: Evergrande Update

(Bloomberg) -- Kaisa Group Holdings Ltd. failed to win bondholder approval for a $400 million debt swap designed to avert default, in a development that...

Apollo Pay Revamp Gives Bosses Shot at $860 Million in Stock
Apollo Pay Revamp Gives Bosses Shot at $860 Million in Stock

(Bloomberg) -- Apollo Global Management Inc. is giving co-Presidents Jim Zelter and Scott Kleinman a shot at more than $860 million in stock payouts as the...

BOE's Saunders Sees Benefit to Waiting for Omicron Data

(Bloomberg) -- Most Read from Bloomberg'Ghost Signs' Haunt London's Reviving NeighborhoodsReliving the New York Subway Map DebateThe Hot New Trend For Hedge ...

H.K. Bourse Ex-IPO Vetting Head Acquitted in Bribery Trial
H.K. Bourse Ex-IPO Vetting Head Acquitted in Bribery Trial
  • US
  • 2021-12-03 09:42:33Z

(Bloomberg) -- A former senior official at the city's stock exchange was found not guilty by a Hong Kong court on charges of taking bribes to facilitate at...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply


Top News: Business