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Companies typically pull back from ad spending when the economy slows.
This struggle of the technology companies also dragged down the actions of Twitter.
The technology sector continues to struggle after the sharp falls that have been recorded due to the instability in the world economy. This Tuesday the actions of Snapchat plummeted 40 percent, after the photos app sounded alarm bells about a slowing economy wiping out digital ad revenue.
According to data from Statista, this social network has almost 530 million active users as of April 2021, where Snapchat easily ranks among the most popular social networks in the world. According to American teens in the fall of 2020, Snapchat is the most important social network of its generation, ahead of the competitor to share photos Instagram and other networks like Twitter or Facebook.
Likewise, the statistics platform points out that 48 percent of US Internet users aged 15 to 25 reportedly used Snapchat, the highest scope of use among any age group. When it comes to user satisfaction with social media, Snapchat’s performance is lackluster. According to data from a recent survey, the social app scored 72 out of 100 points on a consumer satisfaction scale, ranking ahead of Twitter and Facebook but behind Pinterest and arch-rival Instagram.
In a Snap filing with the Securities and Exchange Commission on Monday, he said he expects lower revenue and earnings for the second quarter. “The macroeconomic environment has deteriorated faster and faster than expected”they say
Experts say that companies generally withdraw from advertising spending when the economy slows, which translates in lower revenue for social media companies like Snap, which rely on advertising dollars.
“Snap is a proxy for online advertising and when you see a weakness there, you automatically think of Facebook, Pinterest and Google,” said Dennis Dick, a trader at Bright Trading LLC in Las Vegas.
Recall that Snapchat was one of many tech stocks to soar during the Covid-19 pandemic, trading as high as $83 in September. But shares of the company have plunged more than 70 percent so far in 2022 and were trading at around $13.60 on Tuesday morning.
This drop in Snap scared investors on social media and in the tech sector in general, where shares of the parent company Facebook and Instagram, Meta, plunged 9.8 percent to $177.00 shortly after trading opened.
While those of the Google company registered a loss of 7.9 percent to trade around 2,054 dollars. Pinterest, for its part, fell 26.3 percent to $16.70.
American media reported that approximately 140 billion dollars in total were removed from technology stocks this Tuesday morning, where the tech-heavy Nasdaq Composite Index fell 3.1 percent.
This fight of the technology companies also dragged down the shares of Twitter, which is in the eye of the hurricane with Elon Musk for his agreement to take over the company for 44,000 million dollars. So Twitter shares fell 3.4 percent to $36.59.
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