Snap earnings warning ripples across tech stocks

Yahoo Finance's Emily McCormick examines the tech sector in relation to Snap's plummeting shares and lowered guidance.

Video transcript

RACHELLE AKUFFO: Well, let's take a deeper dive into what's happening with the markets with our very own Emily McCormick. Emily.

EMILY MCCORMICK: Well, Rachelle, as you mentioned, Snap's surprise preannouncement is really one of the big factors that's catalyzed this wave of selling across the tech sector and the broader markets. Of course, we are seeing Snap shares on track for their worst day on record. That stock still off about 40% on an intraday basis, just over 40%. And the NASDAQ composite the worst performing index among the S&P 500 and the Dow.

Now, this is the key warning from Snap's filing that's really spooking investors. That is, quote, "Since we issued guidance on April 21, 2022, the macroeconomic environment has deteriorated further and faster than anticipated. As a result, we believe it is likely that we will report revenue and adjusted EBITDA below the low end of our Q2 2022 guidance range." So as recently as the end of last month, Snap had forecasted revenue growth of between 20% and 25% for the second quarter and adjusted EBITDA between breakeven and $50 million. So we are now looking for these results to come in on the low end of those ranges.

But then what I will point out is that this was really a pretty terse statement from Snap. It didn't really elaborate exactly what in the macroeconomic environment was weighing on these results here. But nevertheless, we are seeing the selling really broadening out to the other tech adjacent stocks, including Meta Platforms, including Pinterest and Twitter. So, really, this contagion we're seeing rippling across the border markets as well today, guys.