Facebook-owner Meta Platforms, Google-owner Alphabet and other companies that sell online ads lost about $80 billion (roughly Rs. 6,39,324 crore) in combined stock market value on Thursday after Snap posted poor quarterly results and warned of an uncertain outlook.

Slammed by a weakening economy, increased competition from TikTok and recent privacy changes on iPhones, the Snapchat owner missed second-quarter revenue targets and warned that “forward-looking visibility remains incredibly challenging.”

Its shares collapsed 26 percent, bringing Snap’s loss in 2022 to over 70 percent.

With Wall Street already worried about a potential recession, Snap’s report also sparked a selloff in rival internet ad sellers. Meta dropped 5 percent in extended trade, while Alphabet fell 3 percent and Pinterest tumbled 7 percent.

Twitter’s shares fell less, losing just under 2 percent.

The drop in Alphabet’s shares cut its market capitalisation by over $40 billion (roughly Rs. 3,19,602 crore), and Meta’s loss reduced its market capitalisation by about $25 billion (roughly Rs. 1,99,751 crore). The drop in Snap’s shares evaporated $7 billion (roughly Rs. 55,930 crore) of its value.

Snap’s poor report also hit other growth stocks, with Spotify Technology, Shopify and Roblox down around 3 percent each after hours.

With Twitter suing Elon Musk to force the billionaire to make good on his April promise to buy Twitter for $44 billion (roughly Rs. 3,37,465 crore), many investors view Twitter’s stock as a wager on the outcome of that upcoming legal battle, and less as a reflection of the company’s current fundamentals.

Twitter is set to report its quarterly results early on Friday, but the micro-blogging platform has canceled its traditional call with analysts, pointing to Musk’s “pending acquisition”.

In its report, Snap said its daily active users rose 18 percent year-over-year to 347 million (roughly Rs. 2,772 crore), beating analysts’ expectations.

But that user growth comes as the customers of social media companies face inflation at 40-year highs and brace for a potential economic downturn, an environment where brands spend less on advertising and apply greater scrutiny to how they spend their advertising dollars.

Alphabet posts its second-quarter results on July 26, Meta reports on results on July 27, and Pinterest on August 1.

© Thomson Reuters 2022