UBS Slashes Targets on 4 Social Media Goliaths

24/7 wall street2022-06-17

Macroeconomic headwinds (inflation, the war in Ukraine, recession fears) are expected to reduce growth in the online advertising business in 2022 and 2023, according to a recent research note from UBS...

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Comments

SCLIEW
2022-06-17
SCLIEW
666
Road1Warrior
2022-06-17
Road1Warrior
Let me read this again
snowpine2005
2022-06-17
snowpine2005
Okay
Footixx
2022-06-17
Footixx
🙁
Hayleyxn
2022-06-17
Hayleyxn
Ok
YueShan
2022-06-17
YueShan
Ok

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Ad spending growth is forecast to rise 14.3% year over year in 2022 to $431.2 billion and 8.8% year over year in 2023 to $469.15 billion.Using 2022 as the base case, UBS then estimates the impact of a macroeconomic downturn similar to the 2001 and 2008 recessions. In both cases, ad spending drops sharply in 2023.The analysts have adjusted their price targets on four of the largest U.S.-based online ad-supported firms, while leaving targets unchanged on two other ad sellers. UBS researchers also noted that emerging market platforms like TikTok could end 2022 with a larger share of the ad market than three of the U.S. firms.AlphabetAlphabet Inc.’s  Google website is expected to account for 42% ($193.9 billion) of the market for online advertising in 2022. Google’s share of the market declines slightly to 44.8% in 2023, before growing to 45.4% in 2024 and 46.9% in 2025.UBS said that Alphabet is relatively well-position this year “given its skew to performance advertising, insulation from privacy headwinds, a continuing travel ad recovery, and the scaling of Performance Max (PMax).” Performance Max is the company’s goal-based campaign type introduced last year that uses machine learning to serve ads. Risks to 2023 include YouTube revenue and profits, Alphabet’s announced $9.5 billion in U.S. office space and data centers, and more competition from other social media players.The analysts maintained their Buy rating on Alphabet stock but lowered the price target from $3,600 per share to $2,650.Meta PlatformsUBS analysts expect Meta Platforms Inc. (NASDAQ: META) to boost ad revenue by just 1.2% year over year in 2022, before jumping by 15% in 2023. Meta’s market share is forecast to drop from 30.5% last year to 27% this year, before rising to 28.5% in 2023.That said, the analysts go on:We think Meta has the best risk/reward skew in large cap online advertising right now, despite continued uncertainty around privacy headwinds, TikTok competition and the timing of Reels monetization.Meta’s “macro backdrop is unfavorable,” however, and “broader consumer softness in retail/eCommerce could outweigh near-term positive trends associated with ramping Reels.”UBS maintained its Buy rating on Meta stock but lowered the $310 price target to $215.SnapLast month, Snap Inc. CEO Evan Spiegel warned that the macroenvironment had deteriorated even more since the company reported quarterly earnings in April and that current-quarter revenue would come in below the low end of the company’s own projected range. The share price dropped more than 40% and dragged other social media stocks down along with it.UBS analysts have cut their estimates of year-over-year growth for 2022 from 24% to 17.5%, down from 64.2% growth between 2020 and 2021. Snap’s ad market share for this year is forecast at 1.1%, growing to 2.0% by 2025.Noting that Snap’s ad buyers skew to large companies, “there could be some downside protection” compared to social media platforms that depend on smaller businesses. The risk there, however, is that exposure to consumer packaged goods and other consumer discretionary advertisers “could expose Snap to more cyclicality of revenue.”UBS maintained its Buy rating on the stock but slashed the $45 price target to $17.PinterestPinterest Inc. was the hardest hit of the social media platforms by Snap’s May announcement, dropping by about 23%. Pinterest’s market share is expected to be 0.7% this year and for the next two years before rising to 0.8% in 2025.The analysts mention a number of headwinds for Pinterest, the most potentially damaging being recent changes to Google’s search algorithms that Pinterest has not yet been able to find workarounds for. The problem “stands to impair the top of funnel user acquisition/re-engagement in a way reminiscent of Tripadvisor and Yelp.” Tipping the scale in Pinterest’s direction is the “commercial intent” of Pinterest’s users which is “compelling longer-term and could drive meaningful revenue growth, especially as Pinterest unlocks additional international markets.”UBS maintained a Neutral rating on the stock but cut its price target from $35 to $19.The analysts included Twitter and Amazon as part of this review. Amazon’s ad business now accounts for 8.9% of the online ad market and is expected to post revenue of $38.2 billion this year. UBS expects Amazon’s share to rise to 13% ($72 billion) by 2025.Twitter’s ad revenue is expected to reach nearly $5.5 billion in 2022 (1.3% market share), rising to $9.6 billion (1.7% share) in 2025. UBS maintained its ratings and price targets for both companies.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9057917417,"gmtCreate":1655449233039,"gmtModify":1676535642211,"author":{"id":"4092970777728640","authorId":"4092970777728640","name":"SCLIEW","avatar":"https://static.tigerbbs.com/5da553e4d3d35db75d1caae023ca8a03","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"4092970777728640","idStr":"4092970777728640"},"htmlText":"666","listText":"666","text":"666","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9057917417","repostId":1177660387,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9057993417,"gmtCreate":1655444748739,"gmtModify":1676535641544,"author":{"id":"4098084219326670","authorId":"4098084219326670","name":"Road1Warrior","avatar":"https://community-static.tradeup.com/news/444bc0aeceab5292f15cd24cd37ab6c3","vip":1,"hat":"https://static.tigerbbs.com/b073a07f77dbe6b3bec6b12311fde6bd","crmLevel":4,"crmLevelSwitch":1,"authorIdStr":"4098084219326670","idStr":"4098084219326670"},"htmlText":"Let me read this again","listText":"Let me read this again","text":"Let me read this again","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9057993417","repostId":1177660387,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9057078165,"gmtCreate":1655442495657,"gmtModify":1676535640875,"author":{"id":"4104801378187350","authorId":"4104801378187350","name":"snowpine2005","avatar":"https://static.itradeup.com/news/30cc314b08db312a03020e5b08d11966","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"4104801378187350","idStr":"4104801378187350"},"htmlText":"Okay","listText":"Okay","text":"Okay","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9057078165","repostId":1177660387,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9057047552,"gmtCreate":1655441740876,"gmtModify":1676535640770,"author":{"id":"3572228950547010","authorId":"3572228950547010","name":"Footixx","avatar":"https://static.tigerbbs.com/286a694c51da40f13325f2f7cd6b8851","vip":1,"crmLevel":6,"crmLevelSwitch":0,"authorIdStr":"3572228950547010","idStr":"3572228950547010"},"htmlText":"🙁","listText":"🙁","text":"🙁","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9057047552","repostId":1177660387,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9057045822,"gmtCreate":1655441542166,"gmtModify":1676535640711,"author":{"id":"3578382329083125","authorId":"3578382329083125","name":"Hayleyxn","avatar":"https://static.tigerbbs.com/38f91d6f48b5ef2c23595e416b33bb59","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3578382329083125","idStr":"3578382329083125"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9057045822","repostId":1177660387,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9057041445,"gmtCreate":1655441024287,"gmtModify":1676535640633,"author":{"id":"3583033297199166","authorId":"3583033297199166","name":"YueShan","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":1,"authorIdStr":"3583033297199166","idStr":"3583033297199166"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9057041445","repostId":1177660387,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":112,"commentSize":12,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; 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