August 10, 2022
When banks kicked off earnings season last week, nervous investors were looking for signs that America’s largest financial institutions were worried about – or even prepared for – a recession. In spite of some omens from those finance leaders, banks mostly stuck the landing.
Now, the market is moving on to its next story: tech. And unfortunately, not all is well with big tech.
Despite better-than-expected reports from Netflix and Tesla early in the week, Snap stock took center stage on Thursday. The company’s stock dove more than -38% after missing on Q2 revenue. The company’s revenue grew 13% YoY to $1.11 billion, which was 2.6% lower than what analysts expected.
They also pulled guidance for the coming quarter – marking greater uncertainty around the company.
That uncertainty also reflected in other tech businesses, especially ones which rely on advertising revenue: Meta (reporting July 27), Alphabet (reporting July 26), and other “big tech firms” lost $80 billion in market cap after the results according to Reuters.
Those companies fell in large-part because of what Snap’s falling advertising revenue likely means for the entire advertising-enabled tech and social sector. In other words, investors understand that Snap is likely not the exception – it’s the rule.
The slowdown in digital advertising has largely been attributed to changes to Apple’s privacy and tracking policies, the macroeconomic situation, prognosticating about the coming recession, and the war in Ukraine.