Social media stocks lost more than US$135 billion in market value Tuesday after Snap Inc.’s profit warning, adding to woes for a sector that is already reeling from stalling user growth and rate-hike fears.
Shares in digital ad-dependent Snap tumbled 43 per cent, their biggest intraday decline ever to trade below its 2017 initial public offering price of US$17. The selloff erased almost US$16 billion in market value, and added to declines for peers including Facebook-owner Meta Platforms Inc., Google-owner Alphabet Inc., Twitter Inc. and Pinterest Inc.
The news spurred widespread selling across the advertising and ad-tech space. Among notable decliners, Trade Desk Inc. sank 19 per cent, fuboTV Inc. lost seven per cent, Magnite Inc. lost 13 per cent, LiveRamp Holdings Inc. slid eight per cent, Roku Inc. dropped 14 per cent, and Vizio Holding Corp. was down almost 10 per cent. In addition, Omnicom Group Inc. fell 8.4 per cent and Interpublic Group of Cos lost 4.9 per cent.
“At this point, our sense is this is more macro and industry-driven versus Snap specific,” Piper Sandler analyst Tom Champion wrote in a note.
Others on Wall Street agreed, with Citi analyst Ronald Josey saying “a slowing macro is likely impacting advertising results across the broader Internet sector, although we believe platforms more exposed to brand advertising—like Twitter, Google’s YouTube, and Pinterest—are likely experiencing a greater impact overall.”
The owner of the Snapchat app, which sends disappearing messages and adds special effects to videos, reported quarterly user growth in April that topped estimates. But with the company saying just a month later that it won’t meet prior forecasts for revenue and profit, analysts noted a rapid deterioration of the economic environment.
Snap and platforms like Facebook and Google are competing for advertising dollars at a challenging time. Spiraling inflation is putting pressure on companies and consumer spending, while recent privacy changes, such as Apple Inc.’s tracking restrictions, have slowed businesses that were booming during much of the pandemic.
User growth is another a big focus for social media firms as they vie to attract new customers to target ads in an already saturated market. In February, Facebook-parent Meta posted the biggest one-day wipeout in market value for any U.S. company ever after saying that user additions stalled.
And broader concerns for the tech sector have also been hitting social media stocks, with the Federal Reserve’s path of rate hikes particularly weighing on technology stocks that are valued on future growth expectations.
Nasdaq 100 Index declined 2.2 per cent on Tuesday, erasing Monday’s advance for the gauge. The tech-heavy index is down 28 per cent this year, wiping out several hundred billions in value from the likes of Apple to other so-called growth peers like Netflix Inc.
Metro Vancouver house prices plunge as interest rate rises – Business in Vancouver
“Buyers, your time is now,” real estate agent says as home prices fall across the region | Photo: Chung Chow
A forecast from TD Bank that B.C. average home prices will fall by 8.1 per cent by next year appears too optimistic in Metro Vancouver as June sale prices dropped for the third straight month.
The June composite benchmark price for all residential properties in Greater Vancouver was $1,235,900, down 2 per cent from May and a 2.2 per cent decrease over the past three months, reports the Real Estate Board of Greater Vancouver.
Detached house prices are seeing the largest dollar decline, down an average of $37,000 per month since March to a June benchmark price of $2,058,600.
On the bellwether Vancouver West Side market, the median price for a detached house plunged $194,000 from May to $3,063,500 in June.
“We’re seeing downward pressure on home prices as we enter summer due to declining home buyer activity, not increased supply,” said Daniel John, REBGV Chairman.
Total residential sales in Greater Vancouver totalled 2,444 in June 2022, a 35 per cent decrease from June 2021, and a 16.2 per cent decrease from the 2,918 homes sold in May 2022.
The Fraser Valley Real Estate Board (FVREB) processed 1,281 sales in June, down 5.8 per cent compared to May and a 43 per cent plunge compared to June of last year.
“In just two months our market overall has shifted into balance, mainly due to a softening of demand for single-family detached homes,” said FVREB president Sandra Benz, who noted the effect of rising mortgage rates.
Fraser Valley detached house price dropped 3.5 per cent, or $57,855, month-to-month to a June benchmark of $1,653, 000 reports the Fraser Valley Real Estate Board.
The Bank of Canada, which has increased its trend-setting interest rate 75 basis points since March, is expected to jack the rate from 50 to 75 basis points on July 6 to fight inflation.
This will trigger a further decline in home sales and prices, according to TD Bank. In a June 30 report, TD forecast that B.C. will see among the sharpest corrections, with average home prices falling by 8.1 per cent into 2023.
The price drops and increased supply should be welcome by homebuyers, according to real estate agents.
“In most areas of Metro Vancouver and especially at higher price points, it is a buyer’s market now,” said Kevin Skipworth, managing partner with Dexter Associates Real Estate in Vancouver.
He pointed to the city of Vancouver strata sector as especially enticing due to increased supply and falling prices. The benchmark price of a townhouse in the city dropped nearly 2 per cent in June from a month earlier and condo prices fell 2.3 per cent month-to-month, with the biggest decline in the trendy West Side.
“Vancouver’s West Side has seen townhouses and condos go up to five-month’s supply from three months last year,” Skipworth said. “What a switch and an opportunity compared to a year ago. Buyers, your time is now.”
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