“TikTok’s strong engagement and rapid monetisation growth are having an outsize impact on Snap’s business,” JPMorgan analyst Doug Anmuth wrote in a note. He cut his rating on the stock to underweight and slashed the price target to a Wall Street low of $9.
Snap didn’t issue financial guidance for the third quarter, except to say that revenue so far in the period is about flat compared with last year. Management also reiterated it plans a “substantially reduced rate of hiring,” echoing plans by Apple Inc. and others. “The earnings optimism may come to a pause for now,” said Tina Teng, a markets analyst at CMC Markets in Auckland. “Snap’s miss on earnings expectations indicates the severe challenges facing its tech peers, typically on social platforms such as Meta Platforms.”
Vital Knowledge called the results from Snap and hard-disk-drive maker Seagate Technology Holdings Plc “awful” and “ugly.” Already battered tech stocks may face more pressure as earnings season ramps up next week. “With more and more mega-cap tech companies planning to slow hiring and downgrade their growth expectations, the economic outlook is certainly not in good shape,” CMC’s Teng said.