Oh, SNAP! Not all social media sites are thriving
The weak ad sales for Snapchat and poor numbers from Pinterest show that you can't just bet on the entire sector.
Social media stocks got a lift Thursday thanks to the strong earnings from Facebook and Instagram owner Meta Platforms. Maybe the digital advertising market wasn’t drying up after all? So much for that.
Snapchat and photo sharing site Pinterest both plunged Friday after posting tepid sales in their first quarter earnings reports. It turns out that advertisers are growing a little skittish…and it may be a market where there a few winners (i.e. Meta, Google/YouTube parent Alphabet and privately held, Chinese-owned TikTok) and many other losers.
Shares of SNAP were down about 20% Friday morning while PINS tumbled 16%. Both stocks rallied in regular trading Thursday on the back of the Meta moonshot.
But it appears that Meta’s might is bad news for its smaller rivals. Meta said in its earnings report earlier this week that ad impressions surged 26% from a year ago…but that the average price per ad fell 17%.
In other words, Meta can afford to take a smaller cut from marketers given its massive heft. That’s not the case for Snapchat and Pinterest.