The company was on track to lose US$15 billion in market capitalization, while shares of major online advertisers and social-media firms were set to lose a combine US$200 billion in value from the rout.Meta Platforms, Pinterest, Twitter and Google-parent Alphabet dropped between 5 per cent and 24 per cent.
Valuations for social media stocks are coming back down to earth after the companies posted unprecedented growth last year when advertisers began to recover from the pandemic, said Mr Brian Wieser, global president of business intelligence at ad agency GroupM. Even so, Snap's valuation of nearly 15 times 2024 estimated earnings before interest, tax, depreciation and amortization, according to Refinitiv data, was significantly higher than Alphabet's 8.5 times and Meta's six times.
"Snap is a proxy for online advertising and when you see weakness there then you automatically think Facebook, Pinterest and Google," said Mr Dennis Dick, a trader at Bright Trading LLC.Snap and its peers including Meta are in the path of a storm that also includes increasing competition from TikTok for users' attention and ad dollars, said Ms Jasmine Enberg, principal analyst at research firm Insider Intelligence.