Tech stocks continue to fall after Snap’s earnings warning

Tech stocks fell on Tuesday as investors dumped shares of companies that rallied during the pandemic.

Snap social media company Inc.

INSTANTANEOUS -43.08%

shares fell $9.68, or 43%, to $12.79, its biggest percentage drop on record. The company issued a profit warning on Monday and said it planned to slow hiring and spending. The stock price has fallen 85% from its all-time high in September 2021.

Other tech stocks that rely on digital ad spend also fell. Google parent alphabet Inc.

slid $110.36, or 5%, to $2,119.40, while Meta Platforms Inc.

fell $14.95, or 7.6%, to $181.28. Roku video streaming company Inc.

was recently down $12.61, or 14%, to $79.16, while Twitter Inc.,

who agreed last month to be sold to Tesla Inc.

Chief executive Elon Musk fell $2.10, or 5.6%, to $35.76.

The tech-focused Nasdaq Composite fell 2.3%, after ending Monday up 1.6%. The Nasdaq, down 28% year-to-date, has been hit harder than other major US indexes. The broad-based S&P 500, by comparison, is down 17%.

Bets on tech stocks have crashed this year, punished by the Federal Reserve’s plan to raise interest rates to tame inflation’s four-decade highs. The market as a whole also retreated due to geopolitical turmoil, inflationary pressures and a global economic slowdown.

“Snap’s decline is confirmation that the market has very little tolerance for higher growth, long-lived companies with more volatile profitability in a risk-averse environment,” said Robert Stimpson, chief investment officer. at Oak Associates. Mr. Stimpson’s company currently favors blue-chip, large-cap companies over volatile tech stocks.

Snap’s warning could signal that ad spending has peaked, analysts say.

“It’s usually one of the first areas where companies cut spending when they start making cuts when times get tough,” said Fiona Cincotta, senior financial markets analyst at services company City Index. UK-based business. “The fact that we are seeing this now is really striking because the situation is deteriorating so quickly for businesses and for the economy in general.”

On Tuesday, bucking the trend, another pandemic winner was video conferencing company Zoom Video Communications Inc..

ZM 5.61%

which rose $5.01, or 5.6%, to $94.34 after raising its earnings outlook while posting its slowest growth rate on record.

Best Buy Co..

BBY 1.21%

Shares rose 88 cents, or 1.2%, to $73.47 after the consumer electronics retailer reported lower sales and earnings for the last quarter. The company said its current year results will be worse than it previously predicted, due to increased promotions and increased supply chain spending.

Write to Hardika Singh at [email protected]

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