Is Facebook Flipping?

Facebook Just Might Be Changing Their Tune
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Two social media groups that have been in a slow growth cycle for awhile now appear to be getting people to spend more time on their apps instead of Facebook. Both Pinterest Inc. and Snap Inc., who respectively operate the Pinterest and Snapchat apps, have been having a fairly slow year but they may be benefiting from the coronavirus pandemic after all.

 

Pinterest is seeing a large growth in users who appear to be the do it yourself types that are looking for small projects to work on when they’re at home more. Snapchat is looking at major revenue gains from advertisers who are trying to reach the younger users that Snapchat gets over Facebook from the short, personal videos and messages. Pinterest shares went up 25% in after hours trading Wednesday afternoon mirroring Snap gains from last week.

 

Both of the company reports added weight to Alphabet Inc., the parent company of Google, as well as Facebook Inc. and Twitter Inc. because of expected gains in ad revenue for them as well, but questions as to who is actually seeing the revenue gains are growing. This is especially true as both Pinterest and Snap executives credited their gains to groups boycotting other social media giants, implicating that Facebook is the one losing advertisers.

 

The Chief Financial Officer of Pinterest Todd Morgenfeld said that “the tailwind we’ve experienced from the advertiser boycott of social media that began in July” in a conference call. He also said with caution that “We continued to benefit from marketers who are prioritizing positivity and brand safety,” and “advertisers tell us that Pinterest is brand-safe relative to other consumer internet platforms and we benefited from this in Q3, though it’s still not clear how sustainable this trend will be, particularly after the U.S. election is over.”

 

The Chief Business Officer of Snap, Jeremi Gorman, made similar statements ““As brands and other organizations used this period of uncertainty as an opportunity to evaluate their advertising spend, we saw many brands look to align their marketing efforts with platforms who share their corporate values.”

 

Facebook will have the opportunity to crush this narrative with their Thursday afternoon third quarter earnings call. Right now advertising experts are saying that the implied boycott would not have an actual effect on their earnings and they are just expecting the trend to be across the spectrum, meaning everyone will see gains.

 

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