Twitter and Snap News bring in $47 billion in social media stocks

(Bloomberg) – First came the disappointing results from Snap Inc. Then news that US officials were debating whether to subject some of Elon Musk’s ventures to national security clearances, including the deal for Twitter Inc.

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Concerned investors are selling social media stocks, putting them on track to lose more than $47 billion in market value as they plummet in premarket trading.

Snap Inc. shares plunged as much as 29% after the company reported its slowest quarterly revenue growth ever and said a decline in advertising spending continued to weigh on results. The sell-off spread to competitors including Meta Platforms Inc., Alphabet Inc., Pinterest Inc. and Trade Desk Inc. amid fears an economic slowdown was deepening and could hurt businesses that rely on digital advertising for revenue to achieve.

Snap’s quarterly results were the first from major internet companies that depend on advertising, and set the stage for what investors can expect when larger companies like Alphabet and Meta Platforms report next week.

The maker of Snapchat, along with platforms like Meta’s Facebook and Alphabet’s Google, are competing for a shrinking pool of advertising dollars this year. Rising inflation is putting pressure on businesses and consumer spending. Meanwhile, new rules from Apple Inc. that require all apps to get smartphone users’ permission to be tracked online make it harder for advertisers to measure and manage their advertising campaigns.

“Weakness in brand advertising appears to be the primary cause of the sharp slowdown,” Jefferies analyst Brent Thill wrote in a note. “It’s difficult to say how many of Snap’s problems are temporary.”

Twitter, meanwhile, fell as much as 16% to $43.91 after Bloomberg News reported that Biden administration officials are considering whether the US should subject some of Elon Musk’s ventures to national security reviews, including the deal for Twitter.

The stock’s wild ride since Musk announced his bid to buy the social media platform in April has been seen throughout the year. On Thursday, the arbitrage spread on the proposed acquisition was the tightest since the deal was announced, as Wall Street appeared increasingly confident the deal would go through. Now it’s on track to fall further below Musk’s asking price of $54.20 amid fears the deal could be under government scrutiny.

Adding to this pile of bad news for tech investors, the possibility that the US might consider extending its China ban to some of the most powerful emerging computing technologies has pressured stocks across the group, with futures contracts up the Nasdaq 100 Index are down about 1% lower.

–Assisted by Alex Barinka, Phil Serafino and Abhishek Vishnoi.

(Updates prices continuously.)

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