Social media stocks slide amid Musk, Snap news

Shares of social media companies fell after a slew of industry news, including a report that Elon Musk could cut 75% of Twitter’s workforce and Snap’s muted fourth-quarter outlook

Shares of social media companies fell after a slew of industry news, including a report that Elon Musk could cut 75% of Twitter’s workforce and Snap’s muted fourth-quarter outlook

Shares of social media companies fell on Friday after a slew of industry news that has investors worried, including a report that Elon Musk could cut nearly 75% of Twitter’s workforce and Snap’s lackluster outlook for the fourth trimester.

Musk told potential investors during his Twitter buyout that he planned to cut nearly 75% of Twitter’s 7,500 employees, leaving the company with a small team, according to a report published Thursday by The Washington Post.

Wedbush’s Dan Ives said in a client note that Twitter Inc. is expected to experience job cuts, but the reported figure may not be the best approach.

“Musk can’t carve his way to growth with Twitter and a ZIP code figure of 75% would be way too aggressive in our view,” he wrote.

A Delaware judge has given Musk and Twitter until October 28 to work out details of the proposed $44 billion deal. If not, there will be a trial in November.

Shares of Twitter fell $2.55, or nearly 5%, to close Friday at $49.89.

Elsewhere in the sector, shares of Snap Inc. fell more than 28% after the company behind Snapchat gave a lackluster fourth-quarter outlook and its third-quarter earnings missed Wall Street’s notice.

Snap reported third-quarter revenue of $1.13 billion, below the $1.15 billion expected by analysts polled by Zacks Investment Research.

While the Santa Monica, Calif.-based company said in a letter to investors that it was not providing an official outlook for the fourth quarter, it said it was highly likely that revenue growth from a year on year slows down over the period. Snap said its internal forecast was that year-over-year revenue growth would be roughly flat.

An analyst note from JPMorgan said Snap is seeing weaker demand due to macroeconomic pressures, platform policy changes and competition.

“We appreciate management’s efforts to control what they can – cut costs and double down on more resilient performance-based ads – but trends remain volatile and the macro backdrop is likely even more challenging in 2023,” the company said. note.

Added to this are concerns about how social media platforms are being used in the run-up to the midterm elections. While platforms like Twitter, TikTok, Facebook and YouTube say they have expanded their work to detect and stop harmful allegations that could suppress voting or even lead to violent confrontations, a review of some of the sites shows they always catching up. 2020, when then-President Donald Trump’s lies about the election he lost to Joe Biden helped fuel an insurrection on the US Capitol.

Shares of Meta Platforms Inc., Facebook’s parent company, fell 1.2%.

The flurry of news also weighed on other players in the industry, including Pinterest Inc., which ended down 6.4%.

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