Illustration: Sarah Grillo/Axios
The world might as well be spinning east to west this year for social media companies.
Why it matters: Last year’s record gains in user engagement and advertising revenue are being erased by changing consumer habits and advertiser worries ranging from domestic and international economic pressures to geopolitical risks.
Driving the news: Snap warned investors yesterday that it won't meet its quarterly revenue and profit targets, Axios’ Sara Fischer reported.
- “Since we issued guidance on April 21, 2022, the macroeconomic environment has deteriorated further and faster than anticipated,” the company wrote in an SEC filing yesterday.
- Shares of Snap closed down 43.1% Tuesday and are more than 84% below their September high.
- Nearly any company connected to digital advertising dollars was dragged down with it Tuesday.
What they're saying: "[W]e find the sharp deceleration in growth [at Snap] ... to be worrisome for the social media space," CFRA Research senior equity analyst Angelo Zino wrote in a note today.
State of play: Advertisers are still dealing with their own issues, from rising costs to ongoing supply chain problems, while they closely gauge consumer demand against record inflation.
- On top of that, companies have more places to spend their money to reach audiences, including on TikTok and soon on Netflix.
Meanwhile, there’s been a slowdown in the attention economy as the pandemic has eased, driving people to activities that don’t involve a screen.
What to watch: Snap CEO Evan Spiegel wrote about "responsibly managing our expenses" in a memo to employees. Like Meta and other companies, Snap plans to pull back on hiring.