Pinterest Inc (PINS.N) and Snap Inc (SNAP.N) both saw their shares fall roughly 18% on Friday after the two social media companies’ quarterly reports alarmed investors concerned about sluggish digital ad spending.
Their poor earnings late Thursday contrasted with excellent results earlier this week from digital advertising heavyweights Alphabet Inc (GOOGL.O) and Meta Platforms Inc (META.O), demonstrating that advertisers are staying with the major firms in an uncertain environment.
Late Thursday, Pinterestforecasted second-quarter revenue growth below Wall Street projections, as the image-sharing platform grappled with a decline in advertising spending in a market it warned remained unclear.
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Also late Thursday, Snapchat owner Snap missed analysts’ revenue expectations, blaming changes to its advertising platform for lower ad demand. It warned that results in the coming quarter could fall short of Wall Street’s expectations.
Snap stated that it was taking steps to improve the relevancy of advertising presented to consumers, and that these adjustments resulted in fewer “actions,” such as users tapping on ads, for advertisers in some situations.
“Aside from Snap’s internal issues, the competitive landscape remains daunting, and we believe the darkest days of this downturn are ahead of us,” Monness Crespi Hardt analyst Brian White wrote in a client note on Friday.
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The two companies lost a combined $6 billion in stock market value, with Pinterest now valued at $15 billion and Snap at $13 billion.
Short sellers betting against Pinterest and Snap were up about $240 million in mark-to-market profits due to Friday’s selloff, Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, said in an email.
At least 12 analysts cut their price targets for Snap, while Pinterest saw at least seven price target cuts on its stock.
Shares of Meta Platforms have surged 13% since Wednesday, when the owner of Facebook and Instagram forecast quarterly revenue well above analyst expectations.
Also on Wednesday Google-owner Alphabet’s quarterly results showed ad sales held up better than expected.
