Meta Platforms CEO Mark Zuckerberg speaks at Georgetown University in Washington on Oct. 17, 2019.
Andrew Caballero-Reynolds | AFP | Getty Images
Wall Street’s worst year since 2008 wreaked havoc on tech companies, particularly those reliant on digital advertising.
Facebook parent Meta lost almost two-thirds of its value in 2022 as year-over-year revenue fell in consecutive quarters, leading the company in November to cut 13% of its workforce. Snap’s stock plummeted 81% as growth dipped into the single digits, and the company opted not to provide a forecast for two straight periods. In August, Snap said it was laying off 20% of employees.
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Following a brutal 2022, investors are starting to come back to the online ad sector ahead of an expected rebound in financial performance at some point in 2023. They’re hoping for some signs of a recovery this week as the biggest companies in the space report fourth-quarter results and provide an update on whether brands are starting to spend more on ads this year after pausing many of their campaigns.
Snap is scheduled to issue results after the close of trading on Tuesday. Meta reports on Wednesday, followed by Google parent Alphabet on Thursday. Also on Thursday, investors will hear from Amazon and Apple, which both have growing digital ad businesses that have been taking market share of late from Google and Facebook.
With concerns of a potential recession still looming large, market analysts anticipate more turmoil ahead for online advertising. A survey of 50 ad buyers published this month by Cowen showed that companies expect their ad spending in 2023 to rise just 3.3%, which the investment bank said represents “the softest ad growth outlook we’ve seen in five years.” Last year those companies increased spending by 7.5%.
“Two-thirds of ad buyers factored in a recession as part of their budgeting process, citing inflation and a softening consumer, among other macro factors,” Cowen said.
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