Snap Gets Clobbered: More Social Media Stock Carnage to Follow?

When a stock trends all morning and afternoon on StockTwits, oftentimes it’s either driven by great news or absolute carnage. 💀 Unfortunately for long-term $SNAP shareholders, on Tuesday it was most certainly an “absolute carnage” kind of day.

In what turned out to be the worst single-day price drop for Snap stock, the 40%-ish haircut seemingly had ripple effects throughout the broader stock market. 🔪 To get the full scoop on SNAP’s slashed guidance, feel free to take a gander at yesterday’s Daily Rip.

The ripple effects spread beyond Snap stock to a wider swath of stocks generally associated with social media, as the Pinterest, Twitter, Match Group, Google/Alphabet, and Meta Platforms share prices all dove in tandem with Snap, albeit to a lesser degree. ⬇️ This leaves traders to ponder whether this panic selling signifies a Snap-specific issue or a deeper, niche-wide trend.

The general consensus, it seems, is that all of the businesses in this category are facing similar headwinds, but with company-specific variations. For example, Alphabet and Google CFO Ruth Porat declined to provide specific guidance, but admitted that since “the largest impact from COVID on our results was in the second quarter of 2020,” Alphabet will face a particularly tough comp in Q2 2022 “as we lap the recovery we had in the second quarter of 2021.” Porat added, “the second quarter results will continue to reflect that we suspended the vast majority of our commercial activities in Russia.”

Match Group CEO Shar Dubey acknowledged, “Our business is not immune to the macroeconomic headwinds such as the war in Ukraine, the strengthening U.S. dollar against foreign currencies at levels we haven’t seen in a while, and lingering variants of COVID-19.” At the same time, the company anticipates $800 to $810 million in total Q2 revenue, representing 13% to 14% year-over-year growth, reflecting the “impact of the challenging current macroeconomic environment.” 🤷

Meta Platforms CEO Mark Zuckerberg had his own early 2022 complaint list, including “softness in e-commerce after the acceleration we saw during the pandemic,” as well as Russia’s invasion of Ukraine and Facebook/Meta being blocked in Russia. Apparently, though, these headwinds didn’t prevent the company from generating $27 billion in Q1 ad revenue, up 6% year-over-year.

Meanwhile, Twitter CFO Ned Segal remains confident, expecting the platform’s revenue to “grow in the low to mid-20s range versus 2021, excluding MoPub and MoPub Acquire, with performance revenue growing faster than brand,” while also anticipating $7.5 billion or more in total revenue for 2023. Turning to Pinterest, the company sees its non-GAAP operating expenses increasing by around 10% quarter over quarter in Q2. Still, the platform has guided for Q2 revenue growth of roughly 11% year over year – not too shabby at all.

In other words, Snap’s peers face challenges, but they are managing said challenges and even thriving. Perhaps Snap’s shareholders are right to bristle at Snap’s sudden guidance revision – but then, there’s a fine line between a reaction and an overreaction. Whether a 40% single-day price drop falls into the former or the latter category is the billion-dollar question which, unfortunately, will only be answered with the benefit of hindsight. ⏳

A Chip Off The Holiday News Flow

It’s a slow week in the market, but as usual, there’s some news out of the semiconductor space. Let’s take a look. 👀

First up is Israel granting Intel $3.2 billion to support the company’s biggest investment in the country. Intel will not only build a $25 billion factory that creates thousands of jobs but will also buy $16.6 billion in goods and services from Israeli suppliers over the next decade. It is anticipated that the plant will open in 2028 and operate through at least 2035. 🏭

Read It

Only Some EV-Makers Delivered

Electric vehicle (EV) manufacturers came out with their fourth-quarter delivery numbers today, sending their stocks all over the place. 📊

First, let’s start with everyone’s favorite, Tesla, which delivered mixed news to investors. It managed 1.81 million EV deliveries around the globe in 2023, meeting its full-year guidance and narrowly topping the consensus estimates. That was up 38% YoY but slowed from 2022. 

Read It

Japan’s Nippon Takes Over U.S. Steel

After months of bidding, U.S. Steel finally has a buyer. However, the auction’s winner has some parties concerned. 🤔

Japan’s Nippon Steel emerged as the top bidder for the 122-year-old steelmaker, beating out offers from Cleveland-Cliffs, ArcelorMittal, and Nucor. Its $55 per share price represents a 142% premium to where $X shares were trading before Cleveland-Cliffs’ $35-per-share offer kicked off the bidding war.

Read It

Thailand Scores Major EV Win

Thailand has been helping lead the electric vehicle (EV) push, with the second-biggest economy in Southeast Asia looking to achieve carbon neutrality by 2050. ♻️

The country is known as the “Detroit of Asia,” serving as a major manufacturing hub. As part of that, it’s looking to make 30% of its car output electric by 2030 so that it doesn’t lose its leadership position in the EV transition. Its government is putting up major funds to help fund that, approving $970 million in tax cuts and subsidies to help encourage demand and boost local production. ⚡

Read It