Why a social media app is dragging the market lower

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Social media company Snap, which owns Snapchat, posted a quarterly net loss of $422 million, compared to a $152 million loss in the same quarter last year.

Snapchat posted a quarterly net loss of $422 million, compared to a $152 million loss in the same quarter last year. As recession concerns grow, Snap is finding it hard to convince digital advertisers to come on board.

"They are taking this time, given all of those other macro pressures, to reevaluate their priorities to ensure that they're making the right investments in the right places," Jeremi Gorman, Snap's chief business officer, said on a call with analysts. "And when we talk about digital advertising, it is the easiest thing to turn off."

Shares of Snap are down 30% in premarket trading. Peers that rely on digital advertising are getting dragged down, too. Facebook's Meta is down 5% premarket, while Pinterest is off 7%. Netflix, which is building out an ad-supported version of its streaming service, is down less than 1%. The tech-heavy Nasdaq is off about 0.3%.

So-called "ESG" and responsible investing funds saw assets under management peak above $8.5 trillion in late 2021. Now, they stand closer to $6.6 trillion, according to new data from Refinitiv Lipper provided exclusively to Before the Bell. "As these near-term economic shocks subside, the very real [ESG] issues of things like climate change and equality will still be very present," he said.

The central bank had previously indicated that it would increase rates by a smaller margin, but decided it needed to be more aggressive based on an "updated assessment of inflation risk."

 

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