The company that runs the social media network Snapchat missed revenue forecasts and warned of “very challenging” conditions, which caused shares to drop sharply.
The company claims that marketers cut back on their expenditure as a result of supply chain issues.
The price of Snap shares decreased by more than 25% in after-hours trading in New York.
Shares of technology giants like Facebook owner Meta and Google’s parent company Alphabet fell as a result of concerns about the economy.
After the US markets closed on Thursday, Snap reported revenue of $1.11 billion (£922 million) for the three months ending in June. The amount was below what Wall Street had anticipated.
According to the company, several of its advertisers have cut back on their spending as a result of rising costs, issues with the supply chain, and labour shortages.
However, Snapchat surpassed projections by reaching 347 million daily active users by the end of June.
It asserted that moving forward, it plans to hire fewer workers, grow its ad business, and develop new revenue streams.
In response to the findings, shares of important technological firms that also sell online advertisements, including Meta, Alphabet, Twitter, and Pinterest, declined in after-hours trade.
The earnings of larger rivals like Twitter, which will release numbers later on Friday, were surpassed by Snap. On Tuesday, Alphabet will publish its most recent update, and on Wednesday, Meta will do the same.
The way social media businesses function is generally really simple. Despite the fact that the product is free, they generate money through selling advertisements. Advertisers, on the other hand, are not flocking to Snapchat. They definitely give off an anxious vibe.
The economy typically suffers when people aren’t spending as much as they used to.
Last year, Apple changed its policy to enable users to decline personalised advertisements.
It has proved detrimental to companies like Snap, which for years has charged advertisers astronomical sums for the right to concentrate on their clients.
TikTok’s extreme success is affecting existing social media companies as they lose subscribers to the Chinese-owned platform.