Social media stocks Meta Platforms, Snapchat parent Snap, Pinterest and Reddit were hit hard Thursday as President Donald Trump's tariff plan startled investors into a market rout. Each company competes for digital advertising spending that market forecasters fear will be cut in response to economic uncertainty.
Trump announced his plan for broad and varying tariffs on imported goods late Wednesday. The S&P 500 fell nearly 5% Thursday, with tech stocks hit particularly hard. Meta stock, meanwhile, fell 9% to close at 531.62. Pinterest stock lost 12.4% to close at 27.50, Snap shed 9.7% to close at 8.02 and Reddit fell 11.5% to 96.88.
Multiple ad market forecasters had lowered estimates for total ad spending growth in 2025 before Trump announced this plan, citing economic uncertainty. A late February survey by the Interactive Advertising Bureau found that 94% of U.S. advertising decision-makers were concerned about the impact of tariffs on ad spending.
Other digital ad stocks were also lower Thursday. Google-parent Alphabet fell 4% to 150.72. Trade Desk stock fell 12.8% to close at 49.08. Amazon, the third largest global digital ad seller behind Google and Meta, fell 9% to 178.41.
"We expect higher tariffs to have a negative impact on enterprise budgets, which will trickle down to ad-based platforms," CFRA analyst Angelo Zino told IBD in an email. "Historically, smaller players (e.g., PINS and SNAP) have felt the brunt of the pain initially while Alphabet's Search business has been the most resilient."
Meta Stock: Tariff Change Could Hit China-Based Advertisers
Stifel analyst Mark Kelley wrote to clients Tuesday that "digital ads volatility is definitely back, leaving us more concerned about forward guidance across our ad-based names." That was based on check-ins with advertisers in recent weeks and published prior to Trump's announcement.
Stifel's Kelley noted Tuesday that larger platforms tend to perform better when advertisers cut back. Google and Meta are typically "the last to go," Kelley wrote.
Along with the broader tariff plan, Trump also plans to soon end the de minimis exemption that allows e-commerce companies like Temu and Shein to ship items directly from China to U.S. consumers.
"Both Shein and Temu have increasingly spent more on advertising within the U.S. over the last two years, specifically on Meta's platforms, and this could have negative implications should those China-based players now pull back on spending in the U.S.," Zino told IBD.
Another factor for social media stocks is the potential rescue of TikTok, a social media competitor. Trump is reportedly weighing a plan that would allow TikTok to keep operating in the U.S. by taking on new investors to dilute the ownership of its China-based parent company ByteDance. Trump already in late January delayed the enforcement of a rule that bans TikTok unless ByteDance divests.
For Reddit, meanwhile, the sell-off adds to a more than 50% drawdown from a high of 230.41 in early February. The stock began slumping after reporting slower-than-expected Q4 user growth in February. But the slide has extended as investors backed away from riskier stocks. Reddit rallied more than 250% from its March 2024 IPO through the end of last year.
