Ahh, we’re finally back to the gigs, shows and in-person hangouts (formerly known as superspreader events) that make social life So Much Fun. 🤪 But investors have been feeling decidedly anti-social social. The Global X Social Media ETF (SOCL), which holds shares in big name social media companies including Twitter (TWTR), Meta (FB), Pinterest (PINS) and Snap (SNAP), has been given the cold shoulder, losing a third of their value so far this year. But the latest kick in the crotch for social media came last week after Snap warned that the money won’t jiggle jiggle quite as much as first thought this year, slashing profit guidance just weeks after providing it, sending the Snap share price plunging more than 40%. Oh, Snap! 🤏
The problem isn’t that people have suddenly stopped sending each other pictures of their junk, or are worried about the Snap’s super cute selfie drone… 🍆 No, they’re still phubbing on the daily. The problem for Snap is that they’re very exposed to a slowdown in digital advertising spending. Around 99% of Snap’s revenue comes from advertising, and as economic storm clouds gather and advertising budgets get slashed and burned, investors have been hunkering down.
At the same time, social media companies are also facing another problem: a 600-pound Gorilla that’s slowly stealing their lunch, TikTok. 🦍 It’s estimated that TikTok's advertising revenue will triple in 2022, surpassing Twitter and Snapchat combined. Meanwhile Meta’s hoping they can combat both problems at once by shifting the fight for attention and eyeballs to the metaverse. 👀 But it ain’t gonna be easy. Not only does Meta expect to lose ‘significant’ money over the next few years building their metaverse, but they’ll then need to go into battle against the reigning Queen of the Metaverse and all things social, Paris Hilton. 👑