Social media ad sales in the United States registered a 36% year-over-year growth in 2021 to reach $58 billion. However, this sector is currently facing a strong rebuff as inflation touched a multi-decade high. Global social media ad sales are now expected to grow by 11%, the slowest pace on record.
Mark Mahaney, a senior managing director at Evercore ISI, said, “Corporations, the ones that spend money on marketing campaigns, are seeing cost inflation in a variety of other parts of their business. So at the margin, that probably means they have less money to spend on marketing.”
Given the backdrop, it might be best to avoid the social media stocks Nextdoor Holdings, Inc. (KIND), Twitter, Inc. (TWTR), and Bumble Inc. (BMBL), given their bleak growth prospects.
Nextdoor Holdings, Inc. (KIND)
KIND operates as the neighborhood network that connects neighbors, businesses, and public services in the United States and internationally.
For the fiscal first quarter of 2022, KIND’s loss from operations increased 32.9% year-over-year to $32.23 million. Net loss for the period increased 31.1% from the prior-year quarter to $32.95 million, while its net loss per share came in at $0.09 in the same period.
KIND’s EPS estimate for the fiscal year ending December 2022 came in at a negative $0.23.
The stock has declined 68.4% over the past year to close the last trading session at $3.35. It slumped 67.3% over the past nine months.
KIND’s POWR Ratings reflect this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
KIND also has a Stability grade of F and a Value, Momentum, and Sentiment grade of D. In the 64-stock F-rated Internet industry, it is ranked #61. Click here to see the additional POWR Ratings for KIND (Growth and Quality).
Twitter, Inc. (TWTR)
TWTR operates as a popular platform for public self-expression and conversation in real-time. The company also provides promoted products that enable advertisers to promote brands, products, and services.
On July 8, TWTR received a purported termination notice from Elon Musk. In response, the Board issued the following statement - “We are committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plan to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.”
For the fiscal quarter ended June 30, 2022, TWTR’s revenue decreased 1.2% year-over-year to $1.18 billion. Income from operations came in at a negative $343.76 million, worsening significantly from the prior-year period.
The company’s net income and net income per share came in at negative $270.01 million and negative $0.35, respectively, down 511.3% and 537.5% from the prior-year period.
Street EPS estimate of $0.27 for the fiscal fourth quarter ending December 2022 reflects a 17.1% year-over-year decrease. TWTR missed the street EPS estimates in three of the trailing four quarters.
The stock has slumped 40.9% over the past year and 22.3% over the past nine months to close the last trading session at $41.61.
It’s no surprise that TWTR has an overall D rating, which translates to Sell in our POWR Ratings system. It has an F grade for Sentiment and a D for Momentum and Stability.
TWTR is ranked #42 in the Internet industry. Click here to see the additional POWR Ratings for Growth, Value, and Quality for TWTR.
Bumble Inc. (BMBL)
BMBL provides online dating and social networking platforms in North America and globally. The company owns and operates websites and applications that offer subscription and in-app purchases dating products.
For the fiscal quarter ended March 31, BMBL’s net earnings decreased 92.6% year-over-year to $23.94 million. Net earnings per share stood at $0.13, down 92.3% from the same period a year ago.
Analysts expect BMBL’s EPS to decline 72.4% year-over-year to $0.53 for the fiscal year ended December 2022.
The stock has declined 27.8% over the past nine months to close yesterday’s trading session at $37.92.
BMBL's overall D rating translates to Sell in our POWR Ratings system. The stock also has a D grade for Momentum and Stability. In the same industry, it is ranked #47.
In addition to the POWR Ratings grades we’ve stated above, one can see BMBL ratings for Growth, Value, Sentiment, and Quality here.
KIND shares were trading at $3.34 per share on Monday afternoon, down $0.01 (-0.30%). Year-to-date, KIND has declined -57.67%, versus a -12.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
3 Social Media Stocks Your Portfolio Won't Like Right Now StockNews.com
