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Why Are Social Media Stocks META, TWTR, SNAP, PINS Down Today?

InvestorPlace logo InvestorPlace 7/22/2022 David Moadel
An image of blocks with different social media icons on them; Instagram, Snapchat, Twitter, YouTube, Facebook; SNAP, META, TWTR © Provided by InvestorPlace An image of blocks with different social media icons on them; Instagram, Snapchat, Twitter, YouTube, Facebook; SNAP, META, TWTR

Snap (NYSE:SNAP) and Twitter (NYSE:TWTR) just reported their second-quarter earnings and the results aren’t pleasing Wall Street. Today, traders are punishing those two names as well as other social media stocks, including Meta Platforms (NASDAQ:META) and Pinterest (NYSE:PINS).

It looks like the worst offender is Snap, although the company actually demonstrated growth in certain areas. In particular, Snap’s Q2 2022 daily active users increased 18% year-over-year (YOY) to 347 million. The company’s revenue also grew 13% YOY to $1.11 billion. That’s good so far, right?

Not so fast. In the report, CEO Evan Spiegel admitted that Snap’s Q2 results “do not reflect our ambition.” Spiegel is probably referring to the company’s staggering $422 million net earnings loss. That figure is certainly worse than the year-earlier quarter, which saw a net loss of $152 million.

As for Twitter, the fiscal picture also wasn’t ideal. In Q2, Twitter’s monetizable daily active usage totaled 237.8 million, up nearly 17% YOY. However, revenue of $1.18 billion was down 1% YOY. Meanwhile, the company’s net earnings loss of $270 million came in much worse than the net profit of $66 million in Q2 2021.

The Wreckage in Social Media Stocks

The bulls might tell today’s traders to “snap out of it,” but that’s easier said than done. Here’s the rundown on how some popular social media stocks are doing today, as of this writing:

  • SNAP stock is down more than 35%.
  • TWTR stock is down just 0.1%.
  • META stock is down nearly 6%.
  • PINS stock: down more than 11%

Since Meta Platforms isn’t entirely a social media company anymore, it makes sense that its shares aren’t down by double digits. As for Twitter, it’s interesting that traders are being so forgiving. This might be due to Twitter’s usage growth.

Looking at the bigger picture, all of these companies will have to get creative to tackle the problem of slowing advertising revenue. Plus, they’ll need to deal with heavy competition from TikTok.

In time, the dips in social media stocks may end up being a buying opportunity. For now, though, it appears that SNAP stock has snapped — and others are following.

On the date of publication, David Moadel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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