Why Snap (SNAP) Stocks Are Plummeting Today
What's the Situation?
Shares of the social media platform Snapchat (NYSE: SNAP) took a 6.2% nosedive in early trading due to market jitters caused by concerns about impending reciprocal tariffs set to be announced at the end of the week. The proposed tariffs, slated for April 2, 2025 (dubbed Liberation Day), target countries with trade deficits with the United States.
In simple terms, should a US trading partner impose higher tariffs on American goods compared to what the US levies on their products, reciprocal tariffs would come into effect.
The potential escalation in trade tensions sparked worries of stagflation (a mix of slowed economic growth and increased inflation) as these tariffs would probably inflate production costs for businesses.
It's common for the stock market to react strongly to news, with significant price plunges sometimes opening up opportunities to invest in high-quality stocks. Is this the right moment to consider Snap? You can check out our comprehensive analysis report here for free.
Market Insights
Snap’s stock displays high volatility, with 23 instances of movements exceeding 5% in the past year. In this context, today's drop suggests that the market views this event as significant but not game-changing in terms of its perception of the company.
A recent notable increase occurred 12 days ago when the stock rose by 5.5% amid market volatility rebounding at the session's start, followed by a slight uptick post the Federal Open Market Committee maintaining rates between 4.25% to 4.50% at its March 2025 meeting, chaired by Jerome Powell. The committee also hinted at two more rate cuts for the year, citing growing economic uncertainty.
While the decision to hold rates steady and indicate further cuts meant no surprises (which the market dislikes), the downside was the Fed's lowered growth forecast to 1.7% from the previous 2.1% projection in December. Simultaneously, the inflation outlook was revised to a 2.8% yearly increase in core prices, up from the prior estimate of 2.5%, indicating the Fed's view of a potential stagflation scenario with rising inflation and slowed economic growth.
Since the start of the year, Snap has dropped by 23.3%, with the stock currently trading at $8.62 per share, almost half of its 52-week high of $17.14 recorded in May 2024. A $1,000 investment in Snap shares five years ago would now be valued at $725.11.
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