Social networks are clogged with growing questions about advertising – Morning Call

On social media, 2022 has been a tough year with protracted questions about spending on advertising, political advertising and capturing Twitter for $ 44 billion, which may or may not happen, depending on which Ilona Mask tweet you read.

Then late Monday, Snap issued a rather scary earnings warning, saying the “macroeconomic environment has deteriorated further and faster than expected” just last month.

All social media is competing for money on advertising, which is increasingly threatened by rising inflation, as well as changes in Apple Inc., which may limit the information that social media platforms can collect about users, which is a great selling point for advertisers.

Shares of Snap Inc, which runs the Snapchat app, which contains disappearing messages and special effects videos, fell 40% on opening calls on Tuesday.

And because Wall Street isn’t sure if the company is outstanding or a canary in the coal mine of social media, shares of parental Facebook Meta Platforms, Twitter and Alphabet have fallen along with them.

If early cuts persist, it could wipe more than $ 100 billion off the balance sheet in a sector that is already under duress.

Snap said late Monday that it now anticipates revenue and adjusted earnings before calculating interest, taxes, depreciation and amortization below the lower level of the previously projected range.

Justin Patterson of KeyBanc Capital Markets, a social media watchdog, warned investors not to take too much into account Snap’s earnings warning, calling it a “warning flag, but not one to sound the alarm across the sector.”

“We believe it is better to look at each channel in the context of the nature of advertisers and verticals, the history of recommendations, vectors of income and investment growth, to assess the level of risk to income and profitability from the macro environment,” Patterson wrote.

Volatility comes in a week when both meta-platforms and Twitter hold their annual shareholder meetings, with a particularly intense emphasis on what can be a lively meeting for Twitter. Elon Musk pressed the pause button at the buyout, saying he needed more information on how many “spam bots” there really are on the social media platform.

Dan Ives ’remark, who follows social media at Wedbush, summarizes the confusion.

“We believe there is now a 60% chance that Musk will try to go and use this problem with a spam account like a scapegoat to get out of the deal, and a 40% chance that Twitter and Musk advice will give a new price in the coming weeks, ”he wrote in a note to clients.

When the market opened, Twitter shares fell more than 3%.

The parent company Facebook Meta has added to the fuss on social networks. The campaign said it would begin publicly giving more details on how advertisers target people with political advertising a few months before the U.S. midterm elections.

Meta is particularly sensitive to changes made to Apple and is now fighting a civil lawsuit against its CEO Mark Zuckerberg. On Monday, the District of Columbia sued Zuckerberg, seeking to bring him to personal responsibility for the Cambridge Analytica scandal, a privacy violation of millions of Facebook users ’personal data that has become a major corporate and political scandal.

At the opening on Tuesday, the shares of Meta Platforms Inc. fell harder than any other company, down nearly 8%.

Alphabet Inc., the parent company of Google, fell 6%.