2 Vulnerable Social Media Stocks To Get Rid Of Now

2 Vulnerable Social Media Stocks To Get Rid Of Now

Posted On September 7, 2022 1:29 pm

U.S. social media ad sales experienced a blowout last year, growing 36% to reach $58 billion. However, since then, sales have cooled as the high inflation has created an environment where brands are prone to spend less on advertising. Moreover, ad spending contracted 12.7% year-over-year in July, registering the worst monthly decline since the same month in 2020.

Ad spending for 2023 is expected to slow down significantly to just 2.6%. On top of it, Apple Inc.’s (AAPL) privacy measures on social media companies that rely on cross-site tracking are forecasted to be in the region of a $40 billion hit to their bottom lines over the course of this and the coming year.

Given this backdrop, we think it might be best to avoid the social media stocks Twitter, Inc. (TWTR) and Snap Inc. (SNAP).

Twitter, Inc. (TWTR)

TWTR operates as a popular platform for public self-expression and conversation in real-time. The company’s primary product is Twitter, a platform that allows users to consume, create, distribute, and discover content.

On July 8, TWTR announced its plan to pursue legal action to enforce the previously announced agreement for Twitter to be acquired by affiliates of Elon Musk for $54.20 per share in cash. TWTR had filed its preliminary proxy statement with the U.S. Securities and Exchange Commission to be acquired by affiliates of Elon Musk. This reflects an uncertain picture for the company ahead.

TWTR’s total cost and expenses increased 31.1% from its prior-year quarter to $1.52 billion in the second fiscal quarter that ended June 30. Its revenue declined 1.2% from the prior-year quarter to $1.18 billion. The income from operations decreased 1,236.3% from its year-ago value to a negative $343.76 million. The company’s net income per share decreased 537.5% year-over-year and amounted to a negative $0.35.

Analysts expect TWTR’s EPS estimate to decrease 25.2% year-over-year to $0.25 for the fourth fiscal quarter ending December. Its consensus revenue estimate is expected to be $1.61 billion for the same quarter.


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