Shares of Snapchat parent Snap had a historically brutal decline Wednesday, wiping out about a quarter of the social media firm’s billionaire leaders’ fortunes in the process.
Snap cofounders Bobby Murphy, left, and Evan Spiegel ring the opening bell at their company’s 2017 initial public offering.
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Key Takeaways
- Snap stock crashed 35% to $11.41 by market close, registering its third-steepest daily decline in Snap’s seven years as a publicly traded company.
- The “violent” plunge came after Snap’s quarterly earnings results released after Tuesday’s market close “left much to be desired on all fronts,” Bernstein analyst Mark Shmulkik explained in a Wednesday note to clients.
- Snap cofounder and CEO Evan Spiegel’s net worth simultaneously tanked by $1 billion to $2.9 billion Wednesday, according to Forbes’ real-time billionaire tracker, a far cry from his $11 billion nest egg in early 2021 when Snap stock traded at over $50 per share.
- Spiegel’s slightly lower-profile and less rich cofounder, Bobby Murphy, lost some $1.1 billion, sending the net worth of Snap’s head of technology Murphy to $2.6 billion.
Contra
Snap’s Wednesday crash is certainly painful for investors, but the stock now trades at roughly the same level it did in November following its previous earnings report. The reaction among analysts was largely less harsh than the share price swing indicated. BMO Capital Markets analyst Brian Pitz characterized the crash as a probable “overreaction,” maintaining his buy rating for the stock and bearish JPMorgan analyst Doug Anmuth noted Snap is off to a “better start” this year as the company’s recent decision to cut 10% of its workforce should boost its bottom line.
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Big Number
87%. That’s how much Snap shares are down from their September 24, 2021 peak of $83. The tech-heavy Nasdaq Composite index is up 5% during the timeframe and shares of social media market leader Meta are up 33%.
Key Background
Snap stock’s misfortunes coincide with the company’s inability to post a profit and decelerating user growth, a brutal combination familiar to many media stocks. Snap lost $1.3 billion last year on $4.6 billion of sales, posting its eighth consecutive year of negative profits, as far back as publicly available data spans, and notably a three-times steeper loss than 2021. Consensus analyst forecasts expect Snap to become profitable for the first time in 2027, according to FactSet. “Obviously, we wish we were moving faster, but we’re working as hard as we can,” Spiegel said on Tuesday’s earnings call.
This article was first published on forbes.com and all figures are in USD.
