Technology stocks fell Tuesday, with investors ditching shares of companies that rallied during the pandemic.
shares lost $9.68, or 43%, to $12.79, its largest percentage decline on record. The company issued a profit warning Monday and said it planned to slow hiring and spending. The stock price has tumbled 85% from its September 2021 all-time high.
Other tech stocks that rely on digital advertising spending also fell. Google parent
slipped $110.36, or 5%, to $2,119.40, while
Meta Platforms Inc.
dropped $14.95, or 7.6%, to $181.28. Streaming-video company
was recently down $12.61, or 14%, to $79.16, while
which last month agreed to be sold to
traded lower $2.10, or 5.6%, to $35.76.
The tech-focused Nasdaq Composite declined 2.3%, after it ended Monday up 1.6%. The Nasdaq, down 28% so far this year, has been hit harder than other major U.S. indexes. The broad-based S&P 500, by comparison, is down 17%.
Bets on tech stocks have unraveled this year, punished by the Federal Reserve’s plan to raise interest rates to tame four-decade highs in inflation. The broader market has also pulled back because of geopolitical turmoil, inflationary pressures and a world-wide economic slowdown.
“The decline in Snap is confirmation that the market has very little tolerance for higher-growth, long-duration companies with more volatile profitability in a risk-averse environment,” said Robert Stimpson, chief investment officer at Oak Associates. Mr. Stimpson’s firm currently prefers large-cap, blue-chip companies to volatile tech stocks.
Snap’s warning could signal that advertising spending has peaked, analysts said.
“It tends to be one of the first areas where businesses cut back when they do start to make cuts when times get tough,” said
senior financial markets analyst at U.K.-based trading services firm City Index. “The fact that we’re seeing that now is really striking because the situation is deteriorating so rapidly for businesses and for the broader economy.”
Bucking the trend Tuesday was another pandemic winner: videoconferencing company
Zoom Video Communications Inc.
, which rose $5.01, or 5.6%, to $94.34 after raising its profit outlook while reporting its slowest growth rate on record.
Best Buy Co.
shares ticked up 88 cents, or 1.2%, to $73.47 after the consumer electronics retailer reported falling sales and profit for the latest quarter. The company said its results for the current fiscal year will be worse than it had previously predicted amid increased promotions and higher supply-chain expenses.
Write to Hardika Singh at [email protected]
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Appeared in the May 25, 2022, print edition as ‘Snap’s Results Sink Tech Shares.’