Advertisers are cutting spending forecast for this year, which is having a negative impact on social media companies as their shares continue to fall.
At current prices, Pinterest, Meta, Twitter, Alphabet, and Snap all lost about US$42 billion in market value. Pinterest shares plunged 11.3% Meta Platforms fell 5.6%, Alphabet fell 3.3%, and Snap fell 36.4%.
Snap, the company behind the popular social media platform Snapchat, said it was looking for new revenue streams to grow.
Advertisers are struggling with rising interest rates and inflation, and some are also struggling with labor shortages and supply chain disruptions that are forcing them to reschedule their advertising spending.
“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,” said Russ Mould, AJ Bell investment director.
Investors are bracing for the slowest global revenue growth in the social media sector’s history, as Apple’s privacy changes continue to affect how much user data they can use to aggregate ads.
“Unfortunately for Snap and the digital ad sector, we believe there are signs of further ad spending cuts,” RBC Capital Markets said.
The sources for this piece include an article in Reuters.