'Snap Drops a Bomb': Snap (SNAP) Stock Crashes Nearly 30% on Forecast Cut, Musk-Twitter Saga to Get a 'Whole Lot More Interesting' Says Analyst
- Growth stocks drag Nasdaq lower, energy shares bounce
- Just Another Bear Market Rally, Morgan Stanley's Wilson Says
- Oil prices rise amid G7 talks on new Russian sanctions
- Coinbase Downgraded to Sell at Goldman on Further Downside Risk, Robinhood Upgraded to Neutral on Better Risk-Reward
- Michael Burry Warns of the Bullwhip Effect, Says the Fed Could Reverse Course
Get instant alerts when news breaks on your stocks. Claim your 1-week free trial to StreetInsider Premium here.
Shares of Snap (NYSE: SNAP) are down almost 30% in pre-market Tuesday after the social media company warned that the deteriorating macroeconomic environment will weigh on its Q2 results.
"The macroeconomic environment has deteriorated further and faster than anticipated. As a result, we believe it is likely that we will report revenue and adjusted EBITDA below the low end of our Q2 2022 guidance range," the company said in a U.S. securities filing.
In April, Snap said it is looking to grow its revenues by 20-25% in Q2 on a YoY basis.
The company will also slow hiring for this year, according to Reuters.
"Like many companies, we continue to face rising inflation and interest rates, supply chain shortages and labor disruptions, platform policy changes, the impact of the war in Ukraine, and more," CEO Evan Spiegel wrote in a note.
Snap dropped a bomb, commented Vital Knowledge analyst Adam Crisafulli.
“Just when tech was trying to find a floor and people were excited about M&A in the sector, SNAP comes out w/a pretty surprising profit warning. We say surprising for two reasons: 1) it’s only been about 1 month since they reported and guided and 2) back on 4/21 mgmt. implied the outlook was conservative, suggesting they could even be upside (that’s obviously not the case). This SNAP update will make the Twitter saga a whole lot more interesting and will obviously weigh on SNAP’s main peers,” Crisafulli said in a client note.
Wolfe Research analyst Deepak Mathivanan cut the price target to $22.00 per share, down from the prior $31.00.
“We believe SNAP's advertiser mix, category exposure, and sub-scale nature in ad budgets are also causing incremental volatility in a weakening macro-environment. As we look ahead, we expect visibility to remain low over the next few quarters. Shares are trading at 3.8x our revised FY23 revenues after a 30% draw down in after-market trading, which is near the COVID bottom (3.5x FY2 Revs) on March 2020. Given the lingering uncertainty on top-line trajectory and SNAP's low profitability, we expect shares to remain volatile over the next few months until estimates stabilize,” the analyst said.
By Senad Karaahmetovic
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Goldman Reinstates Oracle at Sell, Upgrades Gitlab and Atlassian to Buy as it Rebalances Software Ratings
- Chartwell Retirement Residences (CSH-U:CN) (CWSRF) PT Lowered to Cdn$13.50 at TD Securities
- InterRent REIT (IIP-U:CN) PT Lowered to Cdn$15.50 at TD Securities
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst PT Change, Guidance, Hot Comments, Hot Guidance, Hot List, Management Comments
Related EntitiesTwitter, Senad Karaahmetovic
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!