Social media stocks don’t seem to be able to take a break today. Among the refusers of the morning were snap (NYSE:SNAP), Twitter (NYSE:TWTR), meta platforms (NASDAQ:META) and Pinterest (NYSE:PINS). The main culprits behind the moves were Snap’s revenue shortfalls in the third quarter and a report that Elon Musk plans to lay off 75% of Twitter’s workforce.
These companies are already struggling with some problems in 2022. Rate hikes and high inflation aren’t making it any easier for social media platforms to sell ad space.
However, today was another rough day for social media stocks as Snap released its financial results for the third quarter of 2022 and investors clearly didn’t like what they were seeing.
Snap even beat Wall Street’s roughly breakeven earnings expectations by reporting earnings of 8 cents per share. Not only that, but Snap recorded 363 million daily active users (DAUs) worldwide, beating the 358.2 million expectation.
However, investors were deeply disappointed that Snap reported third-quarter revenue of $1.13 billion, falling short of analysts’ consensus estimate of $1.14 billion.
What’s Happening to Social Media Stocks?
Though Snap didn’t miss Wall Street’s quarterly sales estimate by much, SNAP stock is still down 30% this morning. That drastic reaction seemingly dragged other stocks lower: META stock fell 3%, while PINS stock fell 9%.
TWTR stock slipped 4% to 5%, but that’s not necessarily down to Snap’s woes. That Washington Post reported that Tesla (NASDAQ:TSLA) founder Elon Musk, who plans to buy Twitter, “told potential investors in his deal to buy the company that he planned to get rid of almost 75 percent of Twitter’s 7,500 employees.”
With that, Musk would reduce Twitter to a “skeletal staff of just over 2,000.” Sometimes financial traders react positively to a possible downsizing. Today, however, Twitter investors don’t seem particularly pleased.
After all, such drastic downsizing could affect the quality and security of the Twitter platform. So it’s clear that the news about Snap is putting social media stock traders in a fearful mood. The report about a possible downsizing at Twitter does not help the situation either. Over time we will find out if the morning sell-off is calming down or just getting worse.
At the time of publication David Model had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author and are governed by InvestorPlace.com Posting Policies.