Earthquake on Wall Street .. Snap shares lose 40% at the close of trading

The results of social media companies cast a shadow over trading on Wall Street, following Twitter and Snap Inc indicated that advertisers were tightening their financial restrictions in response to a bleak economic outlook.

US stocks closed lower on Friday, on the back of a decline in shares of social media and technology companies following the disclosure of disappointing earnings for Snap Inc., which erased the gains in shares of American Express credit card, which were recorded following optimistic expectations.

However, despite Friday’s losses, the three major indices posted weekly gains.

Snap shares fell following the company that owns the Snapchat application recorded the weakest quarterly growth in sales since the company was listed on the stock exchange, while Twitter rebounded from its previous losses following a sudden drop in revenue.

Internet giants Meta and Alphabet also fell, causing the Nasdaq to drop.

The ICT services index also fell, leading a general decline among the 11 sub-indices of the Standard & Poor’s 500 Index, according to Archyde.com.

According to preliminary data, the benchmark Standard & Poor’s 500 index closed 36.71 points, or 0.92%, to 3,962.24 points, while the Nasdaq Composite Index fell 225.94 points, or 1.87%, to 11,835.66 points. The Dow Jones Industrial Average fell 131.23 points, or 0.41%, to 3,1905.67 points.

Snap’s stock lost 39.14% of its value at the close of trading on Friday, to close at $9.96, breaking the $10 level for the first time since March 2019, following quarterly results that disappointed the markets, according to Forbes.

The results of Snap and Twitter led to a collective decline in the shares of social media companies on Friday, in light of the two companies’ warnings of the reflection of economic pressures on revenues.

Social media company Snap posted a $422 million loss and “significantly” low hiring rates in its second-quarter earnings report, sending its share price down 39.2% at the close.

Snap’s losses during the second quarter, amounting to $422.1 million, are three times the losses for the same period in the previous year, which amounted to $ 152 million.

But the numbers weren’t all bad. Snap generated $1.11 billion in revenue, slightly higher than the $1.06 billion in revenue in the first quarter, but still slightly below Wall Street’s estimate of $1.14 billion.

The company’s daily active users grew 347 million at the end of the second quarter, beating analyst expectations of 344.2 million, according to StreetAccount data. The number of daily users increased by 18%, or 54 million, during the quarter, compared to the same period last year.

Snap’s board of directors has approved a buyback program of up to $500 million in Class A social media common stock.

Snap attributed the increased losses to lower demand due to declining revenue and broader market fluctuations in the form of inflation and higher interest levels.

At its earnings conference Thursday followingnoon, Snap’s chief financial officer Derek Andersen emphasized the need to cut operating expenses that would include a “significant pause” in staffing the company.

In terms of revenue, the third quarter begins fairly flat, according to investor speech, but chief executives at the earnings conference noted Snap is focusing on diversifying its revenue sources and investing in its augmented reality features, which Andersen described as a promising opportunity for Snap.

“The second quarter of 2022 has been more challenging than we expected, as our financial results do not reflect the scale of our ambition. We are not satisfied with our results, regardless of the current headwinds,” said the investors’ letter to the second quarter financial results.

Since the beginning of the year, Snap’s share has lost regarding 79% of its value, while the company’s market value has fallen to $16.3 billion.