Social media stocks can’t seem to catch a break today. Among the morning’s decliners were Snap (NYSE:SNAP), Twitter (NYSE:TWTR), Meta Platforms (NASDAQ:META) and Pinterest (NYSE:PINS). The main culprits behind the moves were Snap’s third-quarter revenue miss and a report that Elon Musk wants to lay off 75% of Twitter’s workforce.
These companies have already faced a number of problems in 2022. Interest rate hikes and high inflation aren’t making it any easier for social media platforms to sell advertising space.
Today was another rough day for social media stocks, however, as Snap released its Q3 2022 financial results and investors evidently didn’t like what they saw.
Snap actually exceeded Wall Street’s earnings expectations of approximately breakeven by reporting earnings of 8 cents per share. Not only that, but Snap saw 363 million global daily active users (DAUs), beating the expectation of 358.2 million.
However, investors were deeply disappointed that Snap reported $1.13 billion in Q3 revenue, falling short of the analyst consensus estimate of $1.14 billion.
What’s Happening With Social Media Stocks?
Although Snap didn’t miss Wall Street’s quarterly revenue estimate by much, SNAP stock nevertheless tanked 30% this morning. This drastic reaction seemingly dragged other stocks down: META stock declined 3%, while PINS stock fell 9%.
TWTR stock skidded 4% to 5%, but this isn’t necessarily due to Snap’s problems. The Washington Post reported that Tesla (NASDAQ:TSLA) founder Elon Musk, who is planning to buy Twitter, “told prospective investors in his deal to buy the company that he planned to get rid of nearly 75 percent of Twitter’s 7,500 workers.”
With that, Musk would reduce Twitter to a “skeleton staff of just over 2,000.” Sometimes, financial traders react positively to potential workforce reductions. Today, however, Twitter’s investors don’t seem particularly pleased.
After all, such a drastic headcount reduction could impact the quality and security of Twitter’s platform. So clearly, the news pertaining to Snap is putting traders of social media stocks in an anxious mood. Moreover, the report about Twitter’s possible workforce cut isn’t helping the situation. In time, we’ll find out whether the morning selloff calms down or only gets worse.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.