Social Media Stocks Take Beating Following Meta’s Underwhelming Q4 2021 Report

Stocks of some social media companies, including Snap (NYSE: SNAP), Twitter (NYSE: TWTR), and Pinterest (NYSE: PINS), sank on Thursday, February 3rd, following less-than-stellar fourth-quarter earnings from Meta Platforms (NASDAQ: FB) which fell below estimates. The Facebook parent company’s stock dropped by 25% and lost more than $200 billion in the process. It also set off a chain reaction for social media ecosystem just when tech stocks were recovering.

Meta’s Q4 results, posted late Wednesday, fell short on earnings, revenue, and user growth. The tech conglomerate also saw a drop in its daily active users (DAUs) from the third quarter. The DAUs fell from 1.93 billion to 1.929 billion between Q3 and Q4, for the first time in the company’s 18-month history. Also, Meta fell short of its expected number of monthly active users (MAUs) by about 40 million.

Social Media Stock Performances by the Numbers

Snap stock slid by around 22% to $24.95 during the afternoon trading session, representing a 17-month low for the social media company. Snap stock is also 69% down from its record high and is currently trading at its IPO price from March 2nd, 2017.

Analysts predict that Snap, which owns the popular platform Snapchat, will report adjusted earnings of 10 cents per share. This is in direct comparison to the 8-cent loss from the same period a year ago. In addition, the consensus for Snap revenue is $1.2 billion, which represents an increment of 32%.

The shares of image sharing and social media platform Pinterest also dipped 9.5% to 24.80, an 18-month low. Like Snap, PINS is currently some way off its February 2021 high of $89.90 – at 72%. Furthermore, investors predict that PINS may drop further to the $17.75 price level if it dips below its current support.

Twitter shares were also down 6.2% on Thursday, at $34.35. However, analysts believe that the microblogging giant is still on a better footing than its social media peers because of the week-long support that seems to be holding well. In addition to this, the general consensus is that there are currently less expectations for Twitter compared to the rest. However, if its current support eventually buckles, experts predict that Twitter may dip further to its June 2020 support at $28.23. The company’s stock is trading 57% down from its February 2021 all-time high.

Meta Offers Reasons for Stock Underperformance

Meta primarily ascribes its sub-par performance to inflation and supply chain issues currently impacting advertising budgets. In addition, the social media platform is also facing challenges from the changes Apple (NASDAQ: AAPL) made to its operating system. According to Meta, the privacy controls initiated by Apple make it harder to track consumer behavior.