Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

A Bad Year May Get Worse for Snapchat and Facebook Owners

Stock Markets Aug 24, 2022 22:58
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
MSFT
-1.28%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DIS
-1.61%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
GOOGL
-2.16%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AAPL
-0.73%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AMZN
-1.68%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
SONY
-1.59%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

(Bloomberg) -- A bad year for digital advertisers may not be done yet.

The likes of Snap (NYSE:SNAP), Pinterest (NYSE:PINS) and Meta Platforms (NASDAQ:META) have seen both estimates and their stock prices slide this year amid mounting competition and falling corporate ad budgets.

Yet according to Piper Sandler analyst Thomas Champion, the final cut to forecasts may still be to come. A change to Apple's (NASDAQ:AAPL) operating system making it difficult for apps to track user activity on iPhone and iPads means the likes of Snap and Meta will continue to lag, he wrote in a note.

Analysts also fear the impact of new entrants as TikTok Inc. gains traction and Netflix Inc (NASDAQ:NFLX) and Walt Disney (NYSE:DIS) launch their ad-supported streaming tiers.

Against such a tough backdrop, shares of most social media companies have taken a beating. Snap is down 77% for the year, followed by Meta’s 52% slide. Pinterest is down 43%.

It’s been “the perfect storm for digital advertising with Apple’s platform changes, the macro environment and TikTok’s growth hitting all at once,” said Matthew Kanterman, director of research at Ball Metaverse Research Partners.

With a recession looming, businesses will be more cautious about spending and opt for the “highest value platforms and not blast out across multiple platforms,” Kanterman said. The likes of Snap will see bigger drawdowns compared with Alphabet's (NASDAQ:GOOGL) Google as “you’re seeing quality outperform the smaller players,” he added.

The Snapchat owner, which last month reported sales that missed its already lowered forecast, has seen the biggest estimate cuts over the last quarter. Analysts have reduced full-year sales estimates by 17% and now expect an adjusted loss of 13 cents a share versus previous projections for a profit, according to Bloomberg data. Meanwhile, Meta saw 2022 revenue estimates cut by 7% in the same period.

While Alphabet and Amazon.com Inc (NASDAQ:AMZN) should fare better, the group, which also includes Pinterest and Twitter (NYSE:TWTR), might be in for a couple of more quarters of cuts to revenue forecasts “before we’d consider it to be washed out,” Piper’s Champion said.

New entrants are a threat to an industry that has been dominated by Alphabet, followed by Meta and social media companies that are able to target ads at the billions of users they draw onto their platforms.

“New mediums could amplify competitive intensity” in the second half of 2022 as many firms compete for ad budgets against “an uncertain backdrop,” Goldman Sachs analyst Eric Sheridan wrote in a note.

To be sure, most sell-side analysts appear optimistic of a rebound. Snap, Meta and Pinterest all have at least four times more buy recommendations than sell ratings and offer at least 30% return potential based on average price targets, according to Bloomberg data.

Tech Chart of the Day

Hedge funds ramped up bets on megacap US tech stocks and whittled down overall holdings to concentrate on favored names last quarter, with conviction growing to levels last seen before the pandemic, according to Goldman Sachs (NYSE:GS) strategists. Amazon.com supplanted Microsoft (NASDAQ:MSFT) as the most popular long position, a timely call this quarter with the stock rising 26% versus the latter’s 7.6% gain.

Top Tech Stories

  • Cathie Wood bought Zoom Video Communications (NASDAQ:ZM) shares as they tumbled to levels seen before the stock’s meteoric rise during the pandemic.
  • A whistle-blower complaint from Twitter’s former head of security, claiming severe shortcomings in the social media company’s handling of users’ personal data, will have wide ramifications for the business.
    • Accusations from a former Twitter executive that the social network had lax data protections have sparked concerns among lawmakers and cyber experts that the alleged vulnerabilities pose a threat to national security.
    • READ: Twitter Whistle-Blower Won Hacker Kudos, Fired Over Performance
  • China has blocked the social media accounts of a nationalistic blogger who waged a campaign against a major Chinese tech firm, in the latest censorship of an outspoken patriotic voice.
  • Sony (NYSE:SONY) is expanding its gaming accessories range with the announcement of a new DualSense Edge wireless controller for the PlayStation 5.
  • Meta Platforms learned that the US Federal Trade Commission was suing the company over one of its smaller acquisitions via a Twitter post.

©2022 Bloomberg L.P.

 

A Bad Year May Get Worse for Snapchat and Facebook Owners
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email