Social media stocks tumble as Twitter and Snap warn of disastrous ad spend

The Twitter logo is displayed on a smartphone in front of a stock chart displayed in this April 29, 2015 photo illustration. REUTERS/Dado Ruvic/File Photo

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July 22 (Reuters) – Shares of social media companies fell sharply on Friday after Twitter Inc (TWTR.N) and the owner of Snapchat reported that advertisers had tightened their purse strings in response to darkening market conditions. economic outlook.

Pinterest Inc fell 11.3%, Meta Platforms Inc (META.O), owner of Facebook, fell 5.6%, Alphabet Inc (GOOGL.O), owner of Google, which also sells online ads , fell 3.3%.

At current prices, Pinterest, Meta, Twitter, Alphabet and Snap were collectively expected to lose approximately $42 billion in market value.

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Twitter also blamed its ongoing battle to close its $44 billion acquisition by Elon Musk for the surprise drop in quarterly revenue. Shares of the microblogging site were down 0.1% in choppy trading. Read more

Advertisers cut spending amid rising interest rates and soaring inflation, with some struggling with labor shortages and supply chain disruptions , Snap Inc said Thursday. Read more

“If you want proof that companies are nervous about the economic outlook, just watch how media platforms and marketing agencies lament a tougher advertising market,” said Russ Mould, chief investment officer of AJ Bell.

Investors are bracing for the slowest global revenue growth in the history of the social media industry as Apple Inc’s (AAPL.O) privacy statement further alters the cloud outlook. Read more

Shares of Snap Inc fell 36.4% and were the most traded on U.S. exchanges as the company said it was looking for new sources of revenue to expand.

“Unfortunately for Snap and the digital advertising industry, we believe there are signs of further reductions in ad spend,” RBC Capital Markets said in a note.

Attention now turns to quarterly reports from mega-cap companies Meta and Alphabet next week. Some analysts believe the drop in their stock price reflects what will likely be a subdued report.

“While more revenue cuts for advertising actions are likely, we believe Alphabet has greater relative revenue stability given the breadth of advertisers, greater spend flexibility than most peers,” said analysts at Bank of American Global Research.

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Reporting by Medha Singh and Akash Sriram in Bengaluru; Editing by Shounak Dasgupta and Shailesh Kuber

Our standards: The Thomson Reuters Trust Principles.

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