One of the nation’s oldest and most famous retailers and one of tech’s most recent IPOs have something in common. Snap Inc. (NYSE: SNAP) and Macy’s Inc. (NYSE: M) have been the victims of “disruption,” another word for being trounced by larger and more innovative companies. Each share another thing. They cannot make comebacks in light of the overwhelming competition.
Macy’s shares were clobbered after it announced mediocre earnings and ongoing trouble with same-store sales. Management said it could not be certain when the company would start to grow again. Many outsiders have observed that with Amazon.com Inc.’s (NASDAQ: AMZN) huge presence in online retail, Macy’s can do nothing but retreat and close stores.
The result of Macy’s announcement was that its shares fell 10% to $20.67, pennies above their 52-week low. Macy’s might have pressed more aggressively into e-commerce a decade ago, which in turn might have improved its current prospects. But Management continued to cling to physical store sales, perhaps in part because they did not want online sales to cannibalize its primary business. Now, it is being disrupted into oblivion.
Snap was a disruptor that has been disrupted. Its earnings were poor enough that its shares cratered by 15% after hours to $13.77, down from a post-IPO high of $29.44. Snap went public on March 2. Facebook Inc. (NASDAQ: FB) has a product called Instagram Stories. Facebook says its service has over a quarter of a billion users. Snap’s Snapchat has 173 million, according to a disclosure made with its earnings. Instagram gets to ride on the back of Facebook’s huge social network. Snap has no similar option.
The fact that Instagram has only been owned by Facebook for five years has to sting Snap. Facebook made a $3 billion offer for Snapchat in 2014. Snap can take some comfort that its current market cap is $16 billion. As the company’s prospects fail, it likely will not stay that high.
Amazon and Facebook have been dominant long enough that they have ploughed under almost all their competition, which include an ancient retailer and a new social network.
Cash Back Credit Cards Have Never Been This Good
Credit card companies are at war, handing out free rewards and benefits to win the best customers. A good cash back card can be worth thousands of dollars a year in free money, not to mention other perks like travel, insurance, and access to fancy lounges. See our top picks for the best credit cards today. You won’t want to miss some of these offers.
Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
