With record-high inflation and consequent interest rate increases, tech stocks have suffered a significant downtrend. Many companies have moved to reduce their digital advertising budgets in the face of high inflation, which is negatively impacting social media companies. Investors’ declining confidence in social media stocks is evident in the Global X Social Media Index ETF’s (SOCL) 5.9% decline over the past month.
Bessemer Venture Partners Byron Deeter has warned of further cutbacks in marketing budgets in the near term. In addition, SNAP CEO Evan Spiegel’s latest grim outlook has made analysts highly pessimistic about the near-term prospects of ad-supported companies. He said, “the macro environment has deteriorated further and faster than we anticipated when we issued our quarterly guidance last month.” Also, the social media giant Meta Platforms Inc. (FB) warned that its second-quarter revenues could decline from the prior-year quarter.
