Snap sounds alarm bells in the social media industry with 30% drop in open

The actions of Snap they sank nearly 30% at the open on Friday, after the company’s flat revenue forecast pointed to more trouble ahead for a social media industry heavily reliant on digital advertising.

Alphabetarray of YouTube, Meta Platform y Pinterest they fell between 2% and 7 percent. Twitter It plummeted 5%, also dragged down by concerns about the security reviews of the billionaire’s takeover bid Elon Musk.

Analysts were quick to cut the price target for Snap stock. Morgan Stanley put it at a low of $7, down from $7.74 at which it was trading.

Digital ad space has suffered as brands have cut marketing and advertising budgets in response to lower consumer demand. Snap’s warning exacerbated fears.

So far this year, digital ad companies have collectively lost around $1 trillion in value, hit by intense competition from TikTok and the challenges of privacy changes on the platform iOS of Applewhich allows users to opt out of having their data tracked.

Snap on Thursday reported its slowest revenue growth as a public company for the latest quarter, forecasting no increase in the final three months of the year.

Difficulties

Snap, which sells ads through video and a range of filters, is seen as an “experimental platform” by many advertisers, who tend to quickly shift their dwindling dollars to larger, established platforms.

In a tough macro economy you continue to see ad buyers prioritizing the biggest and most mainstream platforms, i.e. Google and Meta,” said Bernstein analyst Mark Shmulik.

Snap shares have lost about 77% of their value so far this year, while Alphabet, Meta and Pinterest have lost between 30% and 60%. Twitter, however, has gained 21% on the prospect of billionaire Musk buying the company.