Stocks fell sharply on Wall Street on Tuesday, affected by a significant decline in heavy technology companies, due to concerns about the continued rise in the impact of inflation on their net profits, as well as sharp declines in retail stocks.
A stark warning about profits from Snap has terrified investors and prompted them to dump the shares of major social media companies, especially those linked to revenue. Snap’s share fell 39%, while Meta (Facebook) fell 10% after the Washington Attorney General named the group’s president, Mark Zuckerberg, in a lawsuit, noting that he played a direct role in making the decisions that paved the way for the Cambridge Analytica scandal. I used a lot of data I got from Facebook.
US stocks ended Tuesday’s trading mixed, and at the end of the session, the Dow Jones index rose 0.15% to 31,928 points, and the S&P 500 index fell 0.81% to 3,941 points.
The Nasdaq index fell by 2.35% to record 11,264 points.
Snap’s share ended Tuesday’s trading session with a decline of 43.08% due to the company’s warning of its quarterly results for the current second quarter.
Meta shares fell at the close by 7.62%, Tesla shares fell by 6.93%, and Apple shares fell by 1.9%.
Amazon stock hit a 52-week low, down 3.2%.
Snap shares plunge
Snap shares fell after CEO Evan Spiegel warned in a note to employees that the company would miss its own adjusted revenue and earnings targets for the current quarter. Spiegel wrote that the social media company will also slow hiring through the end of the year, as it looks to manage expenses.
“The macro environment has deteriorated more and faster than we anticipated when we issued our quarterly guidance last month,” the CEO said in the memo. As a result, while our revenue continues to grow year after year, it is growing more slowly than we anticipated at this time.”
In April, Snap reported first-quarter earnings that missed Wall Street forecasts for sales and earnings. At the time, the company said it expected revenue growth of between 20% and 25% year-on-year. It expects adjusted EBITDA between $0 and $50 million.
Abercrombie & Fitch shares
On the retail front, shares of “Abercrombie & Fitch” fell 28%, in trading, on Tuesday, after the retailer announced an unexpected loss in the first quarter of the fiscal year, as shipping costs and products affected sales. The stock had fallen 32% in pre-market trading.
The company also lowered its sales forecast for the 2022 fiscal year, expecting that economic headwinds will prevail until the end of the year at least.
The company now expects revenue to remain flat at 2%, compared to a previous forecast of 2% to 4% growth. Analysts had expected the company to achieve 3.5% annual growth, according to Refinitiv statistics.
Abercrombie reported a fiscal first-quarter net loss of $14.8 million, or 32 cents per share, compared to a profit of $42.7 million, or 64 cents per share, a year earlier.
Revenue grew 4% to $812.8 million, up from $781.4 million a year earlier. Analysts had expected the company to generate revenue of $799 million.
The company cut its forecast for full-year operating margins to the 5% to 6% range, down from the previous range of 7% to 8%. She explained that the adjustment takes into account the higher costs of freight, raw materials, foreign currencies, and the decrease in sales due to the assumed inflationary impact on consumers.
(agencies)