The macroeconomic and geopolitical headwinds have affected the stock market this year. The Fed’s aggressive interest rate hikes have significantly affected high-growth tech stocks.
The tech-heavy Nasdaq Composite has fallen 28.5% year-to-date. Several Internet stocks have missed earnings estimates due to macroeconomic challenges. And many of them have recently announced layoffs and hiring freezes to cut costs.
Fed Chairman Powell has cautioned that the final level of interest rates will be higher than expected, leading many economists to believe that the economy will be in recession next year. A recession may further affect the profitability of internet companies as corporations reduce ad spending and consumers avoid discretionary expenditure.
Snap Inc. (SNAP)
SNAP operates as an international camera company. It offers Snapchat, the popular camera application that enables people to communicate visually through short videos and images. It provides Spectacles, an eyewear product that connects with Snapchat, and offers advertising products.
For the fiscal third quarter ended September 30, 2022, SNAP’s non-GAAP net income declined 50.8% year-over-year to $132.06 million. Its adjusted EBITDA declined 58.3% year-over-year to $72.64 million, while its non-GAAP EPS came in at $0.08, representing a 52.9% decline from the prior-year quarter.
SNAP’s EPS for the quarter ending December 31, 2022, is expected to decline 45.8% year-over-year to $0.12. Over the past year, the stock has fallen 79.9% to close the last trading session at $11.07.
SNAP’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall rating of D, equating to a Sell in our proprietary rating system. The POWR ratings assess stocks by 118 different factors, each with its own weighting.
Within the F-rated Internet industry, it is ranked #53 out of 59 stocks. The company has an F grade for Growth and a D for Momentum, Stability, Sentiment, and Quality.
Click here to see SNAP’s rating for Value.
IAC Inc. (IAC)
IAC operates as a media and internet company worldwide. The company publishes original and engaging digital content in the form of articles, illustrations, videos, and images. It also operates a digital marketplace that connects home service professionals with consumers under the Angi Ads, Angi Leads, and Angi Services brands.
IAC’s total assets for the fiscal third quarter ended September 30, 2022, declined 15.1% to…
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