And if so, does that mean startups will grow more cheaply?
Snap, the parent company of the popular social media service Snapchat, reported profits last week that investors turned down. In the wake of second quarter financial reporting, Snap’s shares fell from $16.81 Thursday afternoon, ahead of the earnings report, to about $10 a share as of this morning.
Snap wasn’t the only victim of its meager earnings record — other companies monetizing ad revenue saw their stock prices plummet over concerns that the social network wasn’t an outlier. Alphabet, Meta and Pinterest were also hit and devalued ahead of the earnings announcements as investors lowered their hopes for ad-based earnings.
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Given the large number of megatech companies betting in the advertising market, the news is important. Combine the fact that startups also pursue advertising as a monetization lever, and concerns about the health of ad spend are important to tech companies large and small.