Inflation: What you're watching is consumers rolling over, Jefferies analyst says
Snap's (SNAP) recent profit warning, which prompted a social media sector selloff, was not a company specific problem, says one analyst.
"I think it's broader sector. I think what your'e seeing is the consumer rolling over. Look a Target (TGT), Walmart (WMT). All the data points to the consumer world," Brent Thill of Jefferies told Yahoo Finance Live on Wednesday.
"The consumer is being more cautious with their dollar. They're effectively impacting demand," he said.
On Tuesday, shares of the parent company of Snapchat sank 43%, their biggest decline on record. Snap slashed its earnings forecast stating, "The macroeconomic environment has deteriorated further and faster than anticipated."
Thill, who covers Snap and has a Buy rating on the stock, says advertising and marketing are the first things to go amid a slowing economy.
"Companies are turning off their advertising and marketing based on the macro conditions slowing, [and the supply] issues," he said. "I think you're going to see this impact Google's (GOOGL) (GOOG) and Amazon's (AMZN) ad business," said Thill.
The analyst also highlighted another headwind impacting online advertising. Consumers are spending more time outdoors and less time in front of their phones and laptops as the pandemic wanes.
Ines is a markets reporter covering equities. Follow her on Twitter at @ines_ferre
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