Snap's warning is putting pressure on the entire tech sector
Snapchat-parent Snap Inc (NYSE:SNAP) is on track for its worst day ever, last seen down 41% to trade at $13.26, after warning investors that it won't meet revenue and adjusted earnings targets for the current quarter. The company sparked a sector-wide selloff, after noting "the macroeconomic environment has deteriorated further and faster than anticipated," in a filing with the U.S. Securities and Exchange Commission (SEC).
On the charts, SNAP is trading at its lowest close in more than two years, and has already erased more than $14 billion in market cap today. Despite the company's first-ever quarterly net profit in February, Snap stock sits 71.8% lower, with overhead pressure from every notable moving average.
Analysts have been quick to weigh in, with no less than 10 price-target cuts rolling in by midday. Most notably, Benchmark halved its rating to $20 from $40. More adjustments could be in the pipeline as well, given that the 12-month consensus price-target of $39.19 is a 195.8% premium to Snap stock's current level of trading. Downgrades could be in the work as well, per the 14 of 19 that still consider the equity a "buy" or better.
Bearish options traders are likely cheering today's negative price action, as puts have been more popular than usual in the last 10 weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SNAP's 50-day put/call volume ratio sits higher than 96% readings from the past 12 months.