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The Snapchat owner’s shares plummeted 29.3% in premarket trading after the company slashed its second-quarter earnings forecast and said the economy had worsened faster than expected in the last month.
Google-owner Alphabet (NASDAQ:GOOGL) Inc, Twitter Inc (NYSE:TWTR), Meta Platforms Inc and Pinterest (NYSE:PINS) Inc, which earn a chunk of their revenue from advertising, fell between 3.7% and 12.4%.
“Snap’s warning has triggered fears that advertising spend has peaked for now,” Russ Mould, investment director at AJ Bell, said.
“When the (economic) outlook is gloomier, advertising spend is pared back. This will put investors in a bad mood and create more storm clouds just at the point when many were hoping the market slump was close to bottoming out.”
Wall Street’s main indexes ended sharply higher on Monday in a broad-based rally led by beaten down banks and Big Tech shares.
The rebound came on the heels of the S&P 500 and the Nasdaq’s longest streak of weekly declines since the dotcom bust in 2001, on concerns about the impact of persistently high inflation on the U.S. economy and corporate earnings.
At 06:17 a.m. ET, Dow e-minis were down 227 points, or 0.71%, S&P 500 e-minis were down 43.25 points, or 1.09%, and Nasdaq 100 e-minis were down 201.75 points, or 1.68%.
Airbnb Inc slipped 2.3% after the vacation rental firm said it would shut down its domestic business in China from July 30, joining a long list of Western internet platforms that have opted out of the China market.
The CBOE volatility index, also known as Wall Street’s fear gauge, rose to 29.39 points.
