A new video from Inspired by Iceland pushes the experience of life through the “metaverse,” as Mark Zuckerberg described it when rebranding from Facebook to Meta on Thursday, October 28, 2021.
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Wall Street is preparing for an online advertising disaster.
Following the disappointing results of Instantaneous last week and a 28% drop in the share price that sent the company’s value to its lowest level since early 2019, investors are now turning to the advertising giants Meta and Alphabet as well as reports this week from Twitter and pinterest. They will also hear Amazon and Microsoftwho own their own large advertising companies.
The flurry of reports comes at a time of extreme skepticism towards web and mobile advertising. Shares of Facebook’s parent company Meta are down more than 60% this year, and the company is set to post a second straight decline in revenue. Alphabet, which fell 30% in 2022, is expected to post single-digit sales growth. Apart from a quarter at the start of the pandemic, this would mark the weakest period for Google’s parent company since 2013.
The economic downturn and fears of a recession are causing many marketers to limit their spending. At a time, Apples iOS’s privacy change from last year continues to punish companies – including Snap and Facebook – that have historically relied on user data to target ads.
“Sentiment in the online ad space has softened lately, with more stories of budget cuts as well as advertisers holding back on budget in hopes of a Q4 flush,” the analysts wrote. of UBS in a report last week. “Looking towards 23, we believe planning amid this level of macro uncertainty sets the stage for below-consensus growth in 23, even if the macro does not deteriorate significantly from here.”
UBS said it would “reduce price estimates and targets across the online advertising group” due to both the economic environment and a strong US dollar. In discussions with digital ad agencies, analysts said they’ve learned that “many ad managers are cutting some budgets, especially at smaller advertisers.”
In Snap’s report released Thursday, the company said results were impacted by a combination of platform changes, economic challenges and competition. For a second consecutive quarter, Snap said it would not provide guidance for the period ahead due to difficulty in predicting the economic trajectory.
Digital advertising stocks in 2022
CNBC
“We are seeing our advertising partners across many industries shrink their marketing budgets, particularly in the face of operating environment headwinds, inflation-induced cost pressures and rising capital costs,” said Snap.
If the third quarter mirrors the second, Snap’s stark report could spell dismal results for its industry peers. In July, Meta, Twitter, pinterestand Google all reported weaker-than-expected results from Snap’s failure.
Investors began planning last week, sending Pinterest shares down more than 6% on Friday after Snap’s report. Twitter fell nearly 5% and Meta more than 1%. Alphabet rose more than 1%, but still underperformed the tech-heavy Nasdaq, which jumped 2.3%.
CNBC’s Jim Cramer and the Investing Club said there’s a chance Snap’s poor results don’t reflect the overall online advertising market. Meta and Alphabet “have built multi-faceted digital ecosystems” that eclipse the smaller Snap, making these companies “more immune to lower digital ad spend,” the Investing Club wrote.
The industry drama this week is not limited to earnings reports.
You’re here CEO Elon Musk has until Friday to complete his proposed $44 billion acquisition of Twitter if he wants to avoid a lawsuit. After repeatedly changing his mind on the deal and being sued, Musk said earlier this month he wanted to close the deal at the originally agreed price of $54.20 per share. Twitter wants to make sure the funding is in place before backing out the lawsuit.
Twitter shares closed last week below $50, suggesting investors remain unconvinced the deal will close. Meanwhile, the company is struggling. Analysts anticipate lower third-quarter revenue in the company’s earnings report, which is due this week.
A bright spot in the online advertising space could be Amazon after its digital advertising business grew 18% in the second quarter, outpacing all major industry players.
While retailers can cut spending on Facebook and elsewhere, Amazon is a stickier platform for them because people using it buy things. For businesses to keep their brands visible on the biggest e-commerce site, they need to pay for the platform.
But even Amazon’s core business has suffered this year, with growth slowing significantly from its boom days during the pandemic. Overall revenue expansion has been in single digits for three consecutive quarters and the stock is down 28% for the year.
By the time Amazon wraps up Big Tech earnings week on Thursday, investors should have a much clearer picture of the online advertising market and the extent to which companies are tightening their belts as the season approaches. holidays.
LOOK: Snap has been the victim of transfers of budgets to TikTok
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