Snap warning shows a consumer pullback is hitting digital ad budgets

saying"the macro environment has deteriorated further and faster than we anticipated," denting revenue growth. , the CEO was a lot more upbeat. Snap shares collapsed 43% on Tuesday to the lowest level since its IPO in 2017.

Consumer transactions are a major driver of ad spending, so when the economy slows, marketing budgets often contract. Consumer packaged goods, video, financial services, and travel are all important advertising segments for Snap's business, and the analysts noted that "the weakness they are seeing is broad based across verticals and geographies."

"We view Snap's negative pre-release as a negative for the rest of the internet advertising sector," the analyst wrote in a note to investors."Snap accounts for only a small percent of total digital advertising, but the macro factors cited should be relevant for all companies."

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