Snapchat may be among the biggest beneficiaries of Twitter’s ad troubles
Enjoys Benefit Snap On Gloom Advertising Twitter The That From The Any Pullback May Economic Broader Be By Offset
Investors in Snap, one of the smaller social media networks, may be among the biggest beneficiaries of Twitter’s loss of advertisers.
Twitter could lose almost a third of its ad revenue as brands pull back from the site, according to estimates from MKM Partners. Meta Platforms, which owns Instagram and Facebook, would win the biggest chunk of that business, though the incremental sales would be about 1% of Meta’s total revenue, MKM says.
However, that same revenue would make a big difference for the Snapchat parent’s much smaller operation, and possibly help revive the stock, which has lost more than three quarters of its value this year.
“What is bad for Twitter might actually be good for Snapchat,” said Dennis Dick, market structure analyst and head trader at Triple D Trading.
Companies including Volkswagen, General Mills, and Pfizer have scaled back or stopped advertising on Twitter, concerned that new owner Elon Musk’s looser moderation policies will make the site less hospitable.
General Motors chief executive Mary Barra told CNBC in an interview that the car maker continues to evaluate advertising on Twitter following its suspension.
Mr Musk has acknowledged that the defections led to a “massive drop” in revenue. He said over the weekend that Apple, the largest advertiser on the platform, has “fully resumed” business with Twitter after mostly stopping a few days earlier.
To be sure, any benefit that Snap enjoys from the pullback on Twitter advertising may be offset by the broader economic gloom. Mr Dick said he’s concerned the overall digital ad pie might get smaller in 2023, and analysts agree that a weakening economy is prompting businesses to cut down on costs, including ad spending.
Snap could draw about 5% to 8% of the advertising that marketers would have spent on Twitter, said Rohit Kulkarni, who follows the stock for MKM.
Even if Snap only draws 5% of brands’ ad spending from Twitter, that should help the company handily beat fourth-quarter revenue estimates, said Bloomberg Intelligence analyst Mandeep Singh.
For social-media companies that have been swept along in this year’s bear market in technology stocks, any boost from Twitter’s woes would be welcome.
A second-half rebound in tech stocks hasn’t helped social media: Shares in Meta and Snap have slumped 24% and 23%, respectively, since June 30, while the Nasdaq 100 Index is up 2.5%.
Bloomberg