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HomeTechnologySocial media stocks slump as Twitter, Snap warn of dire ad spending

Social media stocks slump as Twitter, Snap warn of dire ad spending

The owner of Snapchat and Twitter Inc. (TWTR.N) indicated that advertisers had to limit the money spent in response to an economic downturn, which caused shares of social media companies to drop sharply on Friday.

Pinterest Inc went down by 11.3%, Facebook-owner Meta Platforms Inc (META.O) fell 5.6%, and Google-owner Alphabet Inc. (GOOGL.O) dropped 3.3%. Pinterest, Meta, Twitter, Alphabet, and Snap were all projected to lose a combined $42 billion in market value at the current prices. With Apple Inc.’s (AAPL.O) privacy policies, investors are preparing for the slowest global revenue growth in the history of the social media industry.

Twitter attributed the unexpected decline in quarterly revenue to its ongoing conflict with Elon Musk over closing his $44 billion acquisition with the social media giant. Shares of the microblogging platform decreased 0.1 percent in unstable trading. According to Snap Inc., advertisers have reduced their spending due to rising interest rates and soaring inflation, and some are dealing with not only labor shortages but supply chain disruptions as well.

Russ Mould, investment director of A.J. Bell, one of the U.K.’s most prominent and best-regarded investment platforms, spoke on the issues by pointing out what he claims is obvious, “If you want proof that companies are nervous about the economic outlook, just look at how media platforms and marketing agencies are bemoaning a tougher advertising market.”

The most actively traded stock on the U.S. exchange, Snap Inc., was down 36.4 percent as the company declared it was looking for new revenue streams to expand.

The focus is shifting to mega-cap companies Meta and Alphabet’s quarterly reports this following week. According to Bank of American Global Research analysts, “While more revenue cuts for advertising stocks are likely, we think Alphabet has more relative revenue stability given the breadth of advertisers, more expense flexibility than most peers.”

Experts are beginning to think that the stock price decrease indicates what they expect to be a disappointing report.



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