The Strategist

Bloomberg: Social networks could lose over $100B in market value

05/25/2022 - 03:56

Shares of social media companies could lose more than $100 billion in market value due to a challenging position in the business, which includes sluggish user growth and fears about interest rate hikes, reports Bloomberg.

Snap (which owns the social network Snapchat) has already dropped 30% after the firm warned that it would miss its revenue and profit projections for the current quarter. Snap's market value might drop by $10 billion in total.

Shares of Meta, Alphabet (which owns Google), Twitter and Pinterest saw declines before trading began, with the total decline in market value holding steady at $100 billion.

As Piper Sandler analyst Tom Champion said in a commentary for Bloomberg, "At this point, we see that these are more macro and industry-related factors, and Snap has its own specifics." Other analysts agree, and RBC Capital Markets analyst Brad Erickson thinks the implications for the digital advertising space will generally be negative, with Meta and Alphabet more protected in this situation.