An unexpected warning about the deteriorating economy by Snap Inc. Chief Executive Evan Spiegel rippled through internet and social-media stocks late Monday, potentially ruining the market’s comeback attempt from earlier in the day.
Shares of Snap tumbled more than 30% in after-hours trading, and the stocks of other internet and social-media companies fell along with it: Alphabet Inc. GOOGL, +2.37% slipped 3.6%, Facebook parent Meta Platforms Inc. FB, +1.39% tumbled 7%, Pinterest Inc. PINS, -1.40% fell 12%, and Twitter Inc. TWTR, -1.12% lost an additional 3.7%, after a roller-coaster ride last week as Elon Musk claimed his deal to buy the company was on hold.
The comments by Snap could be an indication of further deterioration in the internet sector, with an overall internet advertising slowdown as the macro economy slows. It’s worth noting that last year, when the impact of Apple Inc.’s AAPL, +4.01% privacy changes was felt on platforms that depended on ad revenue, it turned out that Snap and Facebook were the hardest hit by those changes.
A handful of tech giants have talked in recent weeks about cutting spending and even some jobs amid the changing environment. Netflix Inc. NFLX, +0.58%, which saw the first decline in subscriber growth since its early days, is laying off 150 employees and cutting costs; Robinhood Markets Inc. HOOD, -0.20% is cutting 9% of its workforce and others, like Uber Technologies Inc. UBER, +1.84%, are slashing costs in other ways for now.