Wall Street tries to resist the Snap trauma and the fear of recession: the stock of the company that owns the SnapChat messaging APP collapses by 35% after the announcement of the accounts of the second quarter, which took place yesterday, after the end of bargaining.
Snap’s thud unleashes a contagion effect on the titles of other social networks such as Meta Platforms almost -6%, Alphabet -3% and Pinterest -11%.
After 4 pm Italian time, the Dow Jones remains positive with a rise of 0.12%, the S&P 500 drops 0.12% and the Nasdaq underperforms with a decline of almost -0.70%.
The Dow Jones is set to end the week up 2.4% on a weekly basis, while the S&P and Nasdaq are close to collecting weekly gains of + 3.5% and + 5.3%, respectively.
Treasury rates declined, with 10-year rates returning below the 3% threshold again, slipping to a two-week low, up to 2.8105%, on the American night between Thursday and Friday:
the fall in US ten-year rates was the worst since March 2020, or since the whole world suddenly found itself facing the Covid-19 pandemic.
In a context in which the recession alert resounds all over the world, investors are hunting for so-called safe assets, assets perceived as safer, positioning themselves on US government bonds and German Bunds.
Although declining, two-year Treasury rates still travel higher than 10-year rates, holding above the 3% threshold, at 3.024%.
The inversion of the yield curve of US Treasuries has been confirmed in the 2-10 year period, a phenomenon that is often considered a signal that anticipates the arrival of a recession in the United States.
At this point, the wait remains for the meeting of the FOMC, the monetary policy arm of the Fed of Jerome Powell, scheduled for next week, which will culminate in the announcement on rates on Wednesday 27 July.
The question is whether US rates – currently in the range between 1.5% and 1.75% – will be raised by 75 basis points or 100 basis points, to counter inflation.
Risk aversion in general has sharpened in markets after the eve of ECB-Day, which saw the European central bank led by Christine Lagarde make a double historic announcement: on the one hand, the ECB announced the first rate hike in the euro area in the last 11 years, equal to +50 basis points, double the amount anticipated by the institution itself, in order to counter the surge in inflation in the Eurozone.
On the other hand, the ECB has churned out the highly anticipated anti-spread shield, known as TPI, which, however, has not had a great impact on the markets, due to the four conditions that each member country should respect to request its activation: four conditions that, in the case of Italy, they would not be satisfied at all, in this phase in which the country is facing, among other things, the government crisis, the resignation of Mario Draghi and the early elections on 25 September.
Returning to Snap, in addition to disappointing analysts’ expectations, Snap announced that it will slow the pace of hiring, due to the weakening of revenue growth.
Snap’s loss per share, on an adjusted basis, was 2 cents in the second quarter of the year, compared to the 1 cent loss per share expected by the analysts interviewed by Refinitiv.
Revenue stood at $ 1.11 billion, versus an expected $ 1.14 billion.
The number of daily active users globally did better instead of estimates, coming in at 347 million, compared to the 344.2 million forecast by StreetAccount.
In the letter to shareholders, Snap announced its intention not to provide any guidance on the third quarter results, as “looking forward, visibility remains incredibly challenging”.
Twitter is also the protagonist today, involved in a bitter legal battle with Tesla founder Elon Musk, over his decision to stop the M&A operation with the social platform.
Twitter experienced a higher-than-expected decline in revenue for the second quarter of the year. Revenues for the second quarter amounted to 1.18 billion dollars compared to 1.19 billion dollars a year ago and therefore down 1% but above all well below the expectations of the FactSet analysts of 1, 32 billion dollars. The social platform also recorded overall losses of $ 270 million or 35 cents per share, compared to earnings per share of 8 cents a year ago. The stock is down slightly.