Snap Inc. (#Snap), the owner of the popular social networking app Snapchat, is headquartered in Venice, California. Its shares fell more than 43% on Tuesday (after the close, they gained 1.25%), causing the company’s market capitalization to drop by nearly $16 billion, after the company signaled on Monday that its current-quarter earnings may miss targets in terms of both revenue and profit and it may have to control costs by delaying hiring until the end of the year. Chief Executive Evan Spiegel said in a memo to employees: “Like many companies, we continue to face inflation and rising interest rates, supply chain shortages and labor disruptions, platform policy changes, the impact of the war on Ukraine, etc.” The message reinforces the stagflation that the market is currently expecting.
On Tuesday, losses in the US stock market resumed, with the USA500 -0.81%, USA100 -2.35% and USA30 +0.15%. In addition to Snap’s record-breaking drop, other social media stocks also fell sharply, with Pinterest -23.64%, Facebook -7.62% and Twitter -5.55%, among other big tech stocks.
Aside from inflation and recession concerns, social media companies also face the new California bill that allows parents to sue social media companies through the state legislature if a child (under 18) is found to have an addiction to the company’s social media platforms. The bill would allow parents to sue for up to $25,000 in damages from the platform owners.
Since the start of the year until now, #Snap’s share price has fallen 72% from the 47.70 price zone, and further decline will see significant support in the low zone seen at the start of the March 2020 coronavirus crisis, in the 8.00 zone, while the bullish outlook shows significant resistance at the previous low zone at 21.00.