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Yahoo Finance Live anchors discuss the Snap stock plunge.
AKIKO FUJITA: In terms of sectors we're watching, we are seeing pretty much red across the board, except one sector, consumer staples, the only one in the green, just barely. But Brian, today, it is all about the tech stocks and really the focus on social media.
BRIAN CHEUNG: Yeah, well, specifically, Snapchat, there was some commentary coming from Evan Spiegel, again, the CEO of that company. At a conference yesterday, he noted that the macroeconomic environment has definitely deteriorated further and faster than they expected. And that alone sent the stock down-- get this-- over 40%. I usually try to make some sort of Snap joke, but today is no time for jokes for this company. I mean, that's a substantial move just intraday.
AKIKO FUJITA: It's not that kind of day, right, when you look at where tech stocks are headed. And really, the move today magnified by the fact that Snap reported just a month ago. And they're now--
BRIAN CHEUNG: Right, it was not earnings yesterday.
AKIKO FUJITA: It wasn't earnings. This came through a filing--
BRIAN CHEUNG: Updated guidance.
AKIKO FUJITA: Updated guidance, and the company has said that within the last month, to Brian's point, the macroeconomic environment has deteriorated further and faster than anticipated. A number of reasons given by Evan Spiegel. He said inflation, concerns around the war in Ukraine, supply chain issues, all of that is adding up to costs for companies, who are now rethinking their ad spend. And it's not just Snap, of course. We're seeing some of their competitors, Meta down in a big way, Alphabet down, Apple down as well.
And this is one of those moments, Brian, where we were talking about this with retail last week, where we hear one company talk about deteriorating conditions, and then all the other companies kind of get lumped into it. I guess, the question here is, is this a Snap specific story, or is this something that spells concern for these other names?
BRIAN CHEUNG: It's not, and we were showing the stocks of other kind of tech adjacent social media companies that have also been taking a spill. Pinterest down 27%. I mean, again, at the surface, people might be saying, well, this seems to be a little bit of an overreaction to what was one company lowering their guidance estimates for the second quarter. But when you take a look at Bank of America Securities, after the Snap news, saying that the ad recession concerns are becoming a reality, that is something that is not idiosyncratic just to Snapchat. So they're saying that this is going to be a negative read for e-commerce, for any other type of company that has advertising as a substantial part of their revenue streams.
But look, I just want to point out that the sensitivity that we have seen in the stock itself, irrespective of the fundamental story, we've already heard this type of thing before, and we've already seen jitteriness in the market. A lot of people that are saying because of a recency bias, well, the Federal Reserve raising interest rates is a big reason why we've seen tech stocks be so sensitive lately, you remember in February, where we saw Snap shares sell off because, I believe it was Facebook that reported earnings, that afternoon, we got earnings reported by Snap.
They actually had their first ever quarterly net profit, and then the stock went up. It went down by 30% in one day, and then went up by about 40% on the next day. So we have seen this jitteriness before. We will continue to see this in quarters to come. But again, it's not just one company. It's really industrywide.
AKIKO FUJITA: Well, and to your point, though, how much of this is overdone is the question. We should mention, by the way, Snap says that they're still going to be hiring here roughly 500 new employees by the end of the year. But when you compare that to 2,000 in the last 12 months, obviously, slowing hiring, that's not something that's specific to Snap. We've heard that from other companies, including Meta, as well as Uber.