Snap Makes Mess Afterhours, Splatters Again on Meta, Pinterest, Alphabet: Online Advertising in the Holiday Quarter, Oh Deary

Snap is a paragon of my Imploded Stocks. Meta, after tonight’s drop, is just a hair away.

By Wolf Richter for WOLF STREET.

Snap is the first of the major advertising-dependent social-media or “tech” companies to report earnings for Q3, and once again made a mess all over the place. The same thing happened three months ago when it reported earnings and burned down the whole neighborhood.

Over the summer, Snap laid off 20% of its staff, so we kind of knew that it was going from bad to worse. In late trading today, its shares [SNAP] plunged 26% to $7.88, the lowest price since 2019, lower even than the March 2020 low. Shares have now collapsed by 90% from their high in September 2021, and are down by 54% from the IPO price of $17 in March 2017.

But the 26% plunge tonight can barely be seen on this holy-cow-collapse-chart that shows off a paragon of my Imploded Stocks in all its glory:

The company is infamous for losing gigantic amounts of money every year with religious fervor, and without any kind of exit plan. Today it reported a net loss of $359 million in Q3, bringing its loss year-to-date to $1.14 billion, and its total loss since its IPO in 2017 to $8.3 billion.

The reason it loses so much money is because it lavishes extravagant stock-compensation packages on its executives and employees at shareholders’ expense, who are getting massively diluted. And so, to prop up its collapsed shares, and slow down the dilution, it said that the board had approved a $500 million share-buyback program.

This is kind of funny, for a company that lost over $8 billion since 2018, and lost $1.14 billion so far this year largely due to non-cash losses of the stock-based compensation packages. And now with these share buybacks, SNAP is going to burn $500 million in cash, thereby converting non-cash losses into actual cash incineration. But whatever.

Snap reported – in addition to its huge net loss – that revenues rose only 6% year-over-year, the slowest ever. And it said the Q4 holiday shopping quarter, where advertising normally explodes, would look similarly dreary.

Snap is trying to make a go of augmented reality (AR) and calls itself a “camera company.” With its AR spectacles, users of its app can “reimagine” the reality around them, what they might look in this or that dress or whatever. The idea is that a retailer will work with Snap to allow AR users to try on clothes virtually, for example, and Snap would get paid for this form of advertising with various fees.

Snap blamed the revenue debacle on “a number of factors we have noted throughout the past year”:

  • “Platform policy changes” [that would be Apple’s privacy changes that hit Snap starting last year]
  • “Macroeconomic headwinds”
  • “Increased competition.”

It threw shade broadly over Q4 online advertising, which shook up other advertising-dependent stocks:

“We are finding that our advertising partners across many industries are decreasing their marketing budgets, especially in the face of operating environment headwinds, inflation-driven cost pressures and rising costs of capital.”

And it then refused to provide a full forecast for Q4, with this explanation:

“Forward-looking revenue visibility remains incredibly challenging, and this is compounded by the fact that revenue in Q4 is typically disproportionately generated in the back half of the quarter, which further reduces our visibility.”

Burning down the whole neighborhood:

Social media and “tech” companies that derive a big part of their revenues from online advertising, but that will report earnings over the next couple of weeks, got hit by Snap’s mess, except Twitter, which has a buyout offer on the table from Musk at $54.20 a share, and that kind of locks in the share price.

  • Pinterest [PINS] plunged 7.2% afterhours, to $21.32 a share, down 76% from the high in February 2021.
  • Alphabet [GOOG] dropped 1.9% afterhours, to $98.65, down 35.1% from its high in February 2022.
  • Meta [META] dropped 4.0% afterhours to $126.25, down 67% from its high in September 2021.

Meta, which has staked its existence on the metaverse and changed its name to reflect that, even if no one else is in its metaverse, has been on an amazing downward spiral and as of tonight is just three percentage points away from qualifying for my Imploded Stocks – it needs to be down 70% from its high to be awarded this honor. The stock is about even with its March 2020 low, and is back where it had first been in August 2016:

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  105 comments for “Snap Makes Mess Afterhours, Splatters Again on Meta, Pinterest, Alphabet: Online Advertising in the Holiday Quarter, Oh Deary

  1. Phoenix_Ikki says:

    Oh Snap!…I know it’s lame but just had to do it…

    Knew couple of old co-workers that moved a to Snap many years ago…hopefully they were lucky enough to cash out on those stock option when it was near the peak just like their fearless leader Evan did.

    • grepper says:

      more cringe….snap, crackle, pop!

    • Leo says:

      The real problem : Most corporate executives today have climbed the ladder using empire building, by expanding operations, using free money from low interest rate, with no regards for profits or productivity, caring only about revenues or subscribers.

      These fake leaders have never faced a real downturn and their vision for growth is funny money accounting, and trending techie jargon sold as future :
      1. AI : Really just a linear regression with a Calman filter.
      2. Metaverse : Really just a poor quality video game with an eye hurting VR set, suddenly expected to be 1000 times more valuable.
      3. Drones : Really just a cheap toy quadcopter with no safety and redundancy that doesn’t scale for any automation.

      • Jos Oskam says:

        4. Self-driving cars which don’t and crash into everything once a human driver stops surveilling them.

        • phleep says:

          “augmented reality (AR)”

          A poor substitute for having a little bit of imagination, brains and mental independence. A way to lock advertising straight into one’s eyeballs without any annoying “world,” “nature” or”actual people” in the way. Away to wring cash out of the gullible a million new ways, and abuse their G*d-given gift of attention, based on the above.

      • SomethingStinks says:

        You give them too much credit, most of these upper management shills are there as a part of a golden circle jerk. I don’t want to push my language, don’t want to get banned.

  2. DR DOOM says:

    I don’t think boomers like me would be allowed in the Metaverse. I might lock up with my VR headset on and have to be hauled off on a stretcher, Boomer Lock could be common. It is much safer watching re-runs of Gun Smoke or the Dukes of Hazzard.

    • Halibut says:

      Missing out on the metaverse myself right now. Just finished a Perry Mason episode and moved on to Frazier.

      Must have misplaced my $1500 entrant fee.

      • bulfinch says:

        Gen X, here; give me mumbletypeg, cold Japanese lagers & maybe some Son of Flubber on VHS.

      • WolfGoat says:

        Playing Pong myself! Next up is Battlezone… I love how the tanks blow up into little sticks!

      • BuySome says:

        Bogart & Bacall in Dark noir set in Wolf’s neck of the woods…even a passing shot of a long gone Foster’s restaurant (famous enough back then, but they also controlled Mel’s at the time American Graffiti was being made).

    • phleep says:

      Capitalism as a forced march into useless, worse-than-useless innovation. You are so “out of it”! Out of the roach motel of fake, even Orwellian, “innovation.”

  3. andy says:

    Who are these people who allocate advertisement dollars in the last few years. Are they insane or what. Rhetorical question.

    • MF says:

      The advertising industry is like everything else. Once “everyone” is doing it, “everyone” follows. When FB was the next big thing, everyone rushed to their order desk like it was the unveiling of the iPhone 6. Nobody had to justify buying FB ads. It was an article of faith that you had to have a “presence” there.

      Now it’s old hat and advertisers buy based on actual results. And since FB only serves content consumers at the political extremes, it’s difficult for them to serve up the 20-54 year old average bear.

      Snap is the same. They are flailing in the darkness for a model that can show real world consumer spending results, whereas before all they had to say was “we’re serving up your next generation of customers”. I suspect the spendthrift zoomers never arrived and ad buyers moved on.

      • phleep says:

        A good short book on this, released this year, is “The Subprime Attention Crisis,” predicting a collapse in this whole Internet business model.

  4. TK says:

    Oh, so that’s the game! Use the goggles to try on clothes and imagine you are on the red carpet. A crummy commercial in expensive goggles. Is there no end to this garbage? I filled up my car and the screen now plays commercials. Anyone remember the twilight zone? I feel like I am in the episode where every spoken word is an advertisement. I guess enough people believe it and that fact alone means our existence is polluted. Why do we always have to buy buy buy and now now now? Ugh.

    • Sean Shasta says:

      My sentiments exactly. Ads, Noise, and Drivel – any which way you turn.

    • BuySome says:

      If I wanted “a crummy commercial” I’d send away for the Little Orphan Annie decoder ring…”Don’t forget to drink your Ovaltine.”. Now I have to go wash my mouth out with some soap…Lifebouy, yuk.

    • David G LA says:

      “In a consumer society, there are inevitably two kinds of slaves: the prisoners of addiction and the prisoners of envy”
      – Ivan Illich

    • El Katz says:

      TK: You can usually squelch the audio by touching one of the buttons on the right side of the screen. On the ones at our station, it’s the the second one from the top shuts the dang noise off. The video I can ignore.

  5. Matthew Scott says:

    Imagine the socially useful things that could have been done in the last 6 years with $8.3 billion, and this is just one of the “cash burn machines”!

  6. Bobber says:

    Remember, SNAP stated as a way to send temporary self-destructing pictures of your body parts to others. Not a reliable or respectable business plan!

    • Shiloh1 says:

      Surprised Bezo didn’t buy them for that purpose alone.

    • Heron says:

      Thats its “value”. They still have the images in the databases, so it could be used for blackmail. And not just the image content, but who the image(s) were sent to.

      Betcha Hunter is in there, bigly.

  7. Depth Charge says:

    “Over the summer, Snap laid off 20% of its staff, so we kind of knew that it was going from bad to worse.”

    I don’t know why this made me laugh out loud, but I guess it’s just the absurdity of it all. These companies lose money hand over fist, employ a bunch of overpaid WFH lackeys, and somehow have managed to exist. This entire economy is faker than a $3 bill.

    • BuySome says:

      Don’t forget J. Edgar’s truth as it goes marching on..”There is no organized crime in America”. Yeah, it’s a free for all.

  8. WolfGoat says:

    Is it me, or has the High Yield Index Option-Adjusted Spread just not gone SNAP yet?

    I’m waiting on that one!

  9. TheAltonRoute says:

    The video game fantasy economy is coming to an end.

    • phleep says:

      I paid $5 for a copy of the 2003 game, Battlefield 1942. No ads, no NFTs, no corporate customer-espionage, runs great. I use all kinds of legacy technology. This has required years of buying and locking in various iterations of hardware and matching software. Does whatever I want, all bought and paid for. No subscription-based blood-sucking, no unwanted intrusive “upgrades.” Cut the leash! Off the treadmill! Regain your manliness! /s

      • Seba says:

        That’s pretty hard-core! 😆. Only old software I run is excel from 2010 because it still works and has no yearly subscription fees

  10. dang says:

    “It is no accident that life mimics the passing of the day”
    Good article.

    What I saw when I looked at the ascent and decent in valuation of that penny stock was an indictment of the whole MMT schtict that is going around.

    Something about currency issuers being able to print copious amounts of money, as long as it was spent wisely.

    The QE hangover is getting worse.

    • dang says:

      A pall finely seems to be settling in the asset markets. Including the three poster focal points: Housing, Stocks, and Bonds. There is a quiet time, like now, before, maybe, all hell breaks loose as the three synthetic bubbles begin to collapse upon themselves.

      I think your October 10th article was first rate. Good on you.

      • dang says:

        As we approach October 28, the anniversary of the ” Great Crash” of the stock market that ushered in the Great Depression and the Dust Bowl. Halloween may not be the benign date that we all assume. There may be a reason that Halloween is so widely recognized as a special date.

        Personally, having witnessed both a UFO flying and an inexplicable presence, I find myself apprehensive as the date approaches.

    • dang says:

      Guandlach’s call, the Bond king, for relief from increasing interest rates makes sense.

      He is caught holding long bonds paying a pittance,

      • Anthony A. says:

        I’m sure if he holds them to maturity he will get his principal back. And also collect dividends along the way! Hey! He’s the Bond King from what I read.

    • phleep says:

      Fake money begets fake ephemeral businesses, and a fraudulent mentality.

  11. Random guy 62 says:

    I’ve been using Snapchat casually for many years. It fills a VERY small niche in the spectrum of communication channel richness so most my friends still use it.

    Ever since they went public they have been trying to monetize and whiffing badly every time. The app is barely worth using because it requires tapping through so many ads. They did an update to the whole thing a few years ago and it absolutely bombed. Horribly bad. Had to walk the whole thing back after a week or two. It’s been pretty flat since then IMO.

    They found “maximum ads” and still aren’t making money. What now? Not glasses, not the pixie drone…so time for stock buybacks I guess.

    Every time I see their stock chart I just shake my head and laugh. Their valuation has never been anything but hot air even at IPO.

    Tech investors get a tent in their pants any time an app can hold eyeballs for a few minutes a day. The tinfoil hat part of my brain thinks all the propaganda potential is what drives the valuation to the moon, because it is clearly not dividends.

    • dang says:

      “spectrum of communication channel richness” is a term that the younger people that I have turned my future over too, will use as a rallying cry as they fix the crap we screwed up.

      Awhile ago, someone thought that younger people may be the next WW2 era generation, social Democracy kind of people. I hope so.

      • dang says:

        Returning to your article, since advertising sales are what America produces these days, I find your data alarming. The vaporware companies that straddle the citadel of capitalism’s highest honor, are toast.

        I already thought that. Business changes with the customer.

        • dang says:

          According to me, tomorrow is as likely as not, a day in which the overvaluation of paper stocks breaks below the support level and begins an arguase journey to where the NPV is positive.

          Maybe 2800, is my guess, today. It will change with the days results, so don’t hold me to it. Just saying

    • The original Marco says:

      FED money printing …

    • Augustus Frost says:

      Even after a 90% decline from the peak, SNAP’s market cap is still near $18B or 4X+ annual revenue. It should be worth $0.

      It’s also not a “tech” company, but advertising. Same for “Meta” and it’s fantasy “metaverse”.

    • All Good Here Mate says:

      “Meta, which has staked its existence on the metaverse and changed its name to reflect that, even if no one else is in its metaverse, has been on an amazing downward spiral and as of tonight is just three percentage points away”

      I can’t add anything to this epic statement, except to reuse here for edification.

  12. Brian says:

    You say that the reason that snap loses so much money is because of their stock based compensation plans and, wolf, it seems to me that they lose money because they have a bad business model. I’ve been involved with stock options and stock based compensation and it’s not something that generally causes actual losses in a company. It’s always the business model and it always has been the business model that sucks. I’m not sure if you read any of these comments because I never see much of a response on anything from you and if you really care about your readers you’ll be careful about your opinions versus facts and if you have an opinion please explain it to us what your reasoning is why you say things that you think are pertinent. Okay I’m done with this. Keep up the good work.

    • dang says:

      OK I’ll step up to the plate which neutralizes your complaint about no one giving a rats ass. While I agree that the business model was designed to lose money for everyone but the founders.

      I find no malfeasance. Legally. Morally, perhaps.

      • dang says:

        I mean, this is snapchat we’re talking about, the ridiculous becomes germane.

    • David G LA says:

      Maybe if the “business model” did not included e suite compensation in the tens of millions the company would be profitable. That’s the point. These companies are all fake, just a means to fleece gullible investors.

    • THRILLHOU says:

      @Brian First off, I respectfully suggest you watch your tone. This is Wolf’s empire. I am a reader and, like every reader of this site, am perfectly capable of delineating between fact and opinion. Facts are why I love this site, and generally I find the opinions here quite insightful.

      That said, watch the glass house. You yourself stated, “I’ve been involved with stock options and stock based compensation and it’s not something that generally causes actual losses in a company.” This is anecdotal, meaning effectively, opinion (or at least less than factual).

      In addition to baiting Wolf, your thesis is outlandish. If I understand correctly, the crux of your argument is that stock options/stock-based compensation is net-neutral because bad business models are worse. That’s partially true – bad business models are everywhere, especially in a QE environment, and they are near-impossible to overcome. SNAP is a horrible company, adept only at converting towering piles of investor cash into heat and smoke. Well, into offshore deposits for its insiders. But smoke and fire for the investors. Wold specifically addressed that. $8B in losses since 2018. Over $1B in losses this year. And they’re going to buy back stock for executive compensation. What on god’s earth are these execs being paid for? Why are they being paid.

      This is fooked up. Like WTF. How did we get here? How has this become normal? In the words Sgt Hartman, “Private Joker, why aren’t you stomping his guts out?!!” This SNAP story is incredibly depressing, incredibly infuriating. Being disrespectful to Wolf, while making an inane opinion about the relative merits of stock compensation is absurd. It’s harmful because the company sucks, its leadership sucks, its business model sucks, and its suck brings us all a little lower. The issue is not at all how best to compensate executives. It’s about how did we get here, how do we get back to being a proper country.

    • Wolf Richter says:


      “I’m not sure if you read any of these comments because I never see much of a response on anything from you…”

      You can check for yourself: My responses to other commenters are easy to recognize by the tombstone around them. So go look for them. They’re all over the place. Not sure how you could have missed them.

      Rest assured, I read all comments, some faster than others, and misread plenty of them. And as many commenters can confirm, I delete comments because they violate the commenting guidelines.

    • rojogrande says:

      “I’ve been involved with stock options and stock based compensation and it’s not something that generally causes actual losses in a company.”

      What? I can assure you stock based compensation, like all compensation, is a business expense. Every company deducts it as such over the vesting schedule. When expenses (such as stock based compensation) exceed revenue, you have losses. Generous stock based compensation can cause an otherwise profitable company to lose money, or an already unprofitable company to increase their losses. Every dime of stock based compensation either lowers profits or increases losses. If Snap has a generous stock based compensation plan, it will certainly increase its losses in addition to any other flaws in its business model.

    • Tina says:

      Completely clueless. Get on an app like Blind to see ridiculous amounts of comp the tech bros get paid, mostly stock options. These people don’t produce anything of value to society and we’re wasting capital that could have been used to do social good. Late stage capitalism has become a plague on society.

  13. andy says:

    Inflation changed everything.
    Times up for companies that don’t make money.
    As Wolf said, the Bond Vigilantes are back in town.
    Get real or get lost.
    Goes for governments as well, including Uncle Sam

  14. Michael Engel says:

    1) The economy is slowing down after the infantile boom “I want it now
    from China” was over. Five hundreds ships clogging Savanna and
    Long Beach unloaded their stuff from cranes to trains and tens of thousands trucks creating demand for diesel.
    2) The economy is shifting internally. Trucks are moving day and night with stuff produced in the south, shorter distances.
    3) Toyota from Kentucky, Mercedes from Tuscaloosa, flying things from
    Huntsville, Boeing from S.C, Lockheed and General Dynamics missiles
    and ordnance from Arkansas.
    4) The south is clogged by never ending road work.
    5) The mid west and the south booming economy is invisible to the flying experts on the metaverse, who trust GOOGL, META and the NYT for info.

  15. Steve Schoen says:

    We are at the beginning of a long cold Winter for both the Stock and Bond Markets.

    “Don’t Fight the Fed”

  16. Arya Stark says:

    And right on cue there’s another “Pivot” article from the WSJ. It will never end.

    • Aaron Fairchild says:

      Yup looks like the Fed whisperer came to the rescue this morning. Seems like markets clearly want to rally into the Fed meeting and midterms… Nothing goes to hell in a straight line right!

      Just read JP thinks December CPI will be 6.8 with core @5.1 lol time will tell but Cleveland CPI nowcast has CPI still well over 8 for October so tick tock

    • butters says:

      They have to throw a bone I suppose. With earnings, stocks could slide more than they would have liked.

    • Wolf Richter says:

      Arya Stark,

      Read the WSJ article!! It’s not a “pivot article.” I hate it when headline-readers assume crap and spread manure here. If you can’t get access to the WSJ article, don’t use your imagination about what it says, based on your silly interpretation of the headline. I’m so sick of this BS from headline-readers. Keep dragging headline BS into here, go back to perma-moderation.

      • Rosarito Dave says:

        Hey Wolf, these days, they are not even looking for a pivot… Just the POSSIBILITY that the Fed will SLOW DOWN (from 75 basis points to 50!), seems to be something they’re willing to now hang their hats on. Bulls will grasp at ANY straws to pump the markets up…

        The timing here though is VERY suspect to me. WHY today did the Fed give Nick the go ahead to print this? Could it be with bonds falling hard, DXY soaring and the election 2 1/2 weeks out, that it might be time for the Fed Put to reappear?

        I ain’t sayin’… I’m just sayin’ :-)

        • Rosarito Dave says:

          I just did some quick calculations on the markets move from Oct 12 (the day BEFORE the CPI was released) to the close yesterday. If you remember, the Fed’s Plot chart showed expectations of 75 basis points in Nov and 50 in Dec. So the CPI comes in very hot on Oct 13. Since then the markets have gone up b y the following:

          Oct 12 Close

          DJ – 29,210.85
          S&P – 3,577
          NDQ – 10,417

          Oct 20 (Close)

          DJ – 30,570
          S&P – 3,689
          NDQ – 10,639

          Diff (UP)

          DJ – 1,360 (4.65%)
          S&P – 112 (3.13%)
          NDQ – 222 (2.13%)

          So NOW that the hope is that the Fed will stick to the previous plot is a sign for the Bulls? Even though the markets have gone up ever since the CPI came out? You might have thought that after the CPI came out hot, the Fed might not want a big rally right away, especially if their signalling tighter financial conditions…

          Once again, I ask why did the Fed OK this article, instead of waiting 11 days till their meeting on Nov 3?

        • Wolf Richter says:

          Rosarito Dave,

          “The timing here though is VERY suspect to me. WHY today did the Fed give Nick the go ahead to print this?”

          You’re making up BS and spreading it here.

          Here is what the Fed said at its last meeting (see my article on this):

          — Nov meeting: 75 bpts
          — Dec meeting: open but maybe 50 bpts
          — Jan meeting: another rate hike.

          Here is what the WSJ article said:

          — Nov meeting: 75 bpts
          — Dec meeting: 75 bpts but maybe 50 bpts

          WSJ cited a comment made by Waller in a public speech 2 weeks ago:

          “We will have a very thoughtful discussion about the pace of tightening at our next meeting,” Fed governor Christopher Waller said in a speech earlier this month.”

          WSJ, based on public speeches by other Fed heads:

          “Some officials have begun signaling their desire both to slow down the pace of increases soon and to stop raising rates early next year to see how their moves this year are slowing the economy. They want to reduce the risk of causing an unnecessarily sharp slowdown. Others have said it is too soon for those discussions because high inflation is proving to be more persistent and broad”

          WSJ also said (excerpts):

          “Fed policy makers face a series of decisions. First, do they raise rates by a smaller half-point increment in December? And if so, how do they explain to the public that they aren’t backing down in their fight to prevent inflation from becoming entrenched?”

          “If officials are entertaining a half-point rate rise in December, they would want to prepare investors for that decision in the weeks after their Nov. 1-2 meeting without prompting another sustained rally.

          “One possible solution would be for Fed officials to approve a half-point increase in December, while using their new economic projections to show they might lift rates somewhat higher in 2023 than they projected last month.

          “Cleveland Fed President Loretta Mester has signaled she would favor rate rises of 0.75 point at each of the Fed’s next two meetings because there hasn’t been progress on inflation. “We can’t let wishful thinking drive our policy decisions,” she said on Oct. 6.

          “Some officials have said they want to see proof that inflation is falling before easing up on rate increases. “Given our frankly disappointing lack of progress on curtailing inflation, I expect we will be well above 4% by the end of the year,” said Philadelphia Fed President Patrick Harker in remarks Thursday in Vineland, N.J.

          “Meanwhile, Fed Vice Chairwoman Lael Brainard and some other officials have recently hinted at unease with raising rates by 0.75 point beyond next month’s meeting. In a speech on Oct. 10, Ms. Brainard laid out a case for pausing rate rises at some point, noting how they influence the economy over time.

      • UHeights says:

        Wow! You just did what they did. If you go on CNBC you will see that they are promoting it as a pivot article. You can yell at your followers for not reading the article but if they don’t have access to it then is it their fault or CNBC’s for seeing it as such? Lighten up!

        • Wolf Richter says:

          Don’t watch CNBC.

          And if you do watch it, don’t spread their BS here.

        • qt says:

          CNBC has been wrong about inflation for over a year now. First, they jumped on the bandwagon that it was transitory. Then it has peaked. Then peak again. Then again and again. Now it’s the Fed Pivot soon. It’s coming anytime now. Anytime now. They also were pumping crypto currency like crazy until recently.

        • Ed7 says:

          It’s a fact that investors are desperately looking for signs of a Fed pivot.

          The result is that even the slightest hint of a slow down or reconsideration from one (1) Fed Board Member becomes huge news. That one Fed Member said that they may slow increases to 0.25 or 0.5 at some point is the fodder for the top headline on Bloomberg right now. NOTE HE DID NOT GIVE A TIMELINE.

          These kind of stories do not necessarily translate into an actual pivot. They are almost non-stories, in my opinion, but Bloomberg and the WSJ know their readers want these stories to be on the top of the site.

    • Depth Charge says:

      The markets are back in “fight the FED” mode, simply because there is just too much money out there with nowhere to go but speculate. When the fed funds rate is so grotesquely low and divorced from CPI, money has to chase yield so as not to be lost to rampant inflation.

      All this just means that the FED will need to continue uncorking jumbo rate hikes until further notice. The markets have not gotten religion yet, and are still in major denial. A 2,000 point move up on the DOW within the past couple weeks indicates the excess liquidity still sloshing around.

  17. carlos leiro says:

    Hi, off topic.
    What is happening with health companies?
    It seems to me that there is a big problem there or am I wrong?

    • Mendocino Coast says:

      What is happening with health companies?
      yes off topic >
      Snap and Meta Charts it seems are what the Home prices Charts will look like most likely. So perhaps then the health Company’s will step in and bury the dead.

  18. Island Teal says:

    Wowza….good article and comments. Having read about Evan and his bro’s transforming Venice years ago told me the future was very bright LOL LOL LOL 😂💸😬

  19. Ed7 says:

    Facebook doesn’t have the dire cash burn that Snap does.

    I would say that Snap not only burns cash and has been hurt badly by the Apple policy changes, but has also lost some “cool” sheen. I saw a mention of Snap in Central Intelligence. (No, I didn’t watch to the end) It wasn’t particularly flattering to Snap. Normally, a Hollywood vehicle likes to associate itself with succeeding tech.

    I’d hazard that FB is suffering the same issue. The metaverse as FB has designed it doesn’t seem cool or inviting. If it is, in fact, cool, their marketing is disastrous.

    • Ed7 says:

      Yes, FB also has the Apple privacy policy troubles.

      I think of MySpace when I see falling social media. If the kiddies decide you stink, you’re in trouble. Even older people with jobs (and money!) can leave your platform if the youngsters are really insistent that the place is uncool. :)

      • phleep says:

        If so, this whole society has descended into pathetic wannabe imbecility. Wasn’t Kim Kardashian an early adopter of Snap? Doesn’t that say volumes about how people are incinerating their attention on chasing windmills? Land of lotus eaters, ephemeral spineless flower children.

        Luckily, economics and finance and biology have a solution, if the Fed doesn’t continue to feed this folly.

        • Ed7 says:

          Ha, ha. I cannot disagree.

          The tracks were laid a long time ago. The U.S. has been a silly consumer society even back to the 1920’s, but I stop there only because of limitations in my knowledge about decades before that. I believe the silliness tracks spare cash.

      • butters says:

        FB sucks and MZ defines what uncool is. How’s it still in bidness?

  20. historicus says:

    Am I reading this correctly…
    Fed holdings of Treasuries and MBSs rose last week?

    • Wolf Richter says:

      Assets fell to the lowest level since Dec 8.

      Either your brain doesn’t function or you’re spreading manipulative BS on this site. Back to perma-moderation. You blew your last chance.

      • Wolf Richter says:

        I’m just so incredibly sick of this BS. Why is it so much fun to spread it???

        • Wolf Richter says:

          BS comments are a magnet for more BS comments, and then this comment section becomes a compendium of BS, and no one will read it except the BS commenters. But that’s not what the comments are about. The comments are for many thousands of readers (who never comment) to read and be informed by.

        • BeeKeeper says:

          Wolf, it’s very simple. Your economics are nearly bullet proof.
          Thus, there is nothing left to comment on from this perspective.

          This is why your comments are left with trolls, people who do not understand macro, need to vent, seek attention, try to sabotage your articles, or seeking the trill to making you angry. Wit few exceptions.

          Your mind get slowly poisoned by this never ending fight. You understand, you cannot win this war? It will go on and on, forever.


    • Depth Charge says:

      Not sure what you’re looking at, but when I pull up the FED’s balance sheet it shows them decreasing, like Wolf said.

  21. Depth Charge says:

    I think what’s going on right now is a “flight to perceived quality” in the major stock indices, which leads to a false perception of health. As these Cathie Woodshed duds drop like flies, people cash out their few pennies and throw them into the big names.

  22. RevGJ says:

    Last Wednesday October 18, Metaverse had a big meeting and there will be massive job cuts…November 8 will be their last day…only know because my son brought that news home.

    • butters says:

      Why Nov 8?

      • RevGJ says:

        Now that I think of it, aha! Just know that will be the last day for those getting cut.

      • VintageVNvet says:

        last opportunity to influence mid term elections maybe?
        time will tell, eh, but it looks as though there are going to be at least a half dozen ”investigations” AKA witch hunts IF the repubs take control of the congress
        sure are interesting times,
        too bad Wolfstreet seems to be the ONLY place to get decent reporting these days
        makes me very happy to support it

  23. ru82 says:

    Nat Gas is down over 50% in 3 or 4 months. Down big today. This is going to help a lot with lowering inflation. Nat Gas is an industrial input, Fertilizer input, electricity input, and heating. We should be see the effects over the next few months?

    • Wolf Richter says:

      Nah, because only a small portion of the spike in the futures market ever made it into retail prices of NG in the first place. And big users of NG, such as industrial companies and power plants, are hedged for much of their needs years in advance. Their costs didn’t go up in proportion with the futures market, and their costs are now not declining in proportion with the futures market.

      • VintageVNvet says:

        This is true and reflected in Duke Energy’s recent offer to REFUND millions to their customers,,, NEVER thought I would see that, especially after they just requested 15% RISE starting January…

  24. HeavyC says:

    An entire generation of tech talent and all we have to show for it is cheap Chinese junk, digital coins/ape pics, and multiple ways to send n00ds.

    What a waste.

    • Harvey Mushman says:

      We have a lot more to show for it than cheap Chinese junk… although there is a lot of that.

      The USA started the whole semi conductor industry. That is HUGE.

    • Heron says:

      Thats the “true” AI – all this so-called intelligence over the past few decades is mostly artificial.

  25. George W says:

    Less than Zero!

    The retail industry has been wiped out by a company that makes no profit on what it sells! The analyst did not care as money has been free and revenues have continued to grow.

    Amazon’s 2nd prime week was a complete fail.
    A desperate attempt by a desperate management team, to game the system.

    Amazon’s 1st quarter year over year revenue growth, not profit, was a paltry 7%. Going forward, Amazon’s revenue results will be less than zero and it’ stock prices will certainly follow.

  26. CreditGB says:

    This Snap word salad needs a half gallon of salad dressing to help it’s wilted, and slimy lettuce go down.

    They must use a focus group approved dictionary for writing apocalyptic reports to their doomed investors. We are clueless becomes “Forward looking revenue visibility remains incredibly challenging” Why not add “OMG” while they’re at it?

    “Forward-looking revenue visibility remains incredibly challenging, and this is compounded by the fact that revenue in Q4 is typically disproportionately generated in the back half of the quarter, which further reduces our visibility.”

  27. CreditGB says:

    These hollow stocks all seem to have the same chart price trajectories. Low prices for months and months, followed by that big 2021-22 spike, followed by the big drop as you include them in your list. I find this highly interesting to follow these and try to understand the mentality driving the cash burner business models that attract so much capital.

    I am just an observer of the passing parade, but have to wonder what drove those all too common and nearly identical value spikes from 2021? Can’t be projected profits, those seemingly were never part of their business plans.


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