- Pinterest (NYSE:PINS) stock is plunging lower today after rival Snap (NYSE:SNAP) issued an earnings warning
- Today’s plunge worsens the situation with Pinterest’s shares, which were already down nearly 40% on the year.
- Snap’s earnings warning has fueled fears of a potential recession in the U.S.
In morning trading, PINS stock is down 25%, worsening an already bad situation for shareholders of the social media company. Prior to today, Pinterest’s stock had declined nearly 40% year to date.
Pinterest is one of several social media companies whose share price is being battered today after Snap, the operator of the Snapchat social media platform, said it is unlikely to meet its second-quarter earnings estimates due to deteriorating macroeconomic conditions and a decline in advertising revenue. That news has spooked investors who are selling off social media stocks as a result.
What Happened With PINS Stock
In a regulatory filing with the U.S. Securities and Exchange Commission (SEC), Snap warned that it is likely to miss its own targets for revenue and adjusted earnings in Q2. Snap also said it plans to reduce the number of new employees it hires this year.
In a memo to staff, Snap CEO Evan Spiegel said: “We believe it is now likely that we will report revenue and adjusted EBITDA below the low end of the guidance range we provided for this quarter.”
Spiegel also said that Snap plans to reduce its hiring this year to about 500 new employees, down from more than 2,000 employees hired in 2021. SNAP stock is down more than 40% today.
Why It Matters
Snap’s earnings warning and reduced hiring is sending shockwaves through other social media stocks, including shares of PINS. While Pinterest’s share price is down 25%, Meta Platforms (NASDAQ:FB) stock is down 9% and Twitter’s (NYSE:TWTR) share price is off by nearly 5%.
The warning from Snap has put a scare in already-nervous investors who are concerned about slowing growth. News that macroeconomic conditions are hurting Snap is also fueling fears that the U.S. economy could fall into a recession as the Federal Reserve aggressively raises interest rates.
What’s Next for Pinterest
PINS stock falls steeply today as the entire social media sector gets pulled down along with SNAP stock. Investors and analysts are treating the earnings warning and decelerating growth at Snap as a sign of tough times ahead for the economy and markets. With investor sentiment already low, Snap’s earnings warning has made a bad situation worse.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.