Media, marketing and advertising stock snapshot

Rising inflation appears to be giving way to increasing uncertainty and reduced demand from advertisers on the tech platforms.

The share prices of tech firms with meaningful advertising businesses encountered a seismic fall last Tuesday after Snap Inc issued revisions to its Q2 forecasts that saw tech stocks plummet $233b. A challenging macroeconomic environment and less discretionary consumer spending due to inflation has prompted speculation there will be less demand from brands to reach potential customers.

Meta:

  • Meta investors appeared alarmed by Snap’s unexpected profit warning and revised Q2 estimates last week. As a result, Meta’s Q2 forecasts have been downgraded significantly through FY22-23. Meta’s estimates have been scaled back to reflect a weaker digital ads industry backdrop.
  • Meta is trading at 195.13 USD today, up 1.83%.
  • Meta’s revenue estimates from April reveal it is expected to increase revenue by just 0.8% year-on-year in Q2 2022, down from its previous 5.5% estimates.
  • Meta stock slumped at 177.07 USD last week following Snap’s profit warning announcement.

Snap:

  • Snap stock’s meteoric cratering last Tuesday sent shockwaves across the market, inciting a $233b tumble in tech stocks across the board.
  • Last Tuesday, Snap stock declined 39.8%, dragging down other digital advertisers: Meta Platforms (FB) fell 8.6%, Alphabet (GOOGL) lost 6.3%, Pinterest (PINS) shed 24.5%, and Twitter (TWTR) declined 4%.
  • Today, Snap stock is trading at 15.58 USD, an increase of +0.77 (5.20%) since markets last closed at 14.81 USD.

Alphabet Inc:

  • Alphabet, parent company of Google, faced some pressure in its stock price as part of the post-Snap broad market sell-off. Its share price deteriorated by over 5% last week in the aftermath of Snap’s profit warning.
  • Alphabet is currently trading at 2,246.33 USD, up 4.20% since market closed at 2155.85 USD.
  • Google Search grew 24.2% last quarter, meaning that as digital ad profits have rolled in, Alphabet has invested heavily in new businesses, most notably Google Cloud.

Twitter:

  • The Twitter buyout saga continues, with Tesla CEO Elon Musk on Wednesday revising the financing plan for his proposed $US44 billion ($62 billion) purchase of Twitter, following dramatic accusatory demands of Twitter’s active user database.
  • Australian shares jumped on Friday, after a surge across Wall Street, while Twitter shareholders have sued billionaire Elon Musk, accusing him of manipulating the company’s share price.
  • Twitter stocks are currently trading at 40.17 USD
  • Of the tech platforms, Twitter appeared to suffer the least deteriorative blow to its share price following Snap’s profit warning last week.
  • On Friday, markets closed at 39.52, lending to a 1.64% hike in share price today.

Omnicom Group Inc:

  • Omnicom’s Q1 results reported $1.39 earnings per share for the quarter, beating analysts’ consensus estimates of $1.28 by $0.11. The business had revenue of $3.41 billion during the quarter, compared to analysts’ expectations of $3.29 billion.
  • Omnicom Group’s shares fell more than 9% last week following the Snap crash, creating concerns surrounding the market for digital advertising.
  • OMC stocks are trading at 75.00 USD today, up 2.68% after last closing at 73.04 USD.
  • More recently, CEOs of Omnicom and Interpublic engaged in social justice dialogue, urging their teams to think about the best ways to effect societal change in the wake of the recent mass shootings in Uvalde, TX and Buffalo, NY.

Publicis Group:

  • Publicis Groupe began 2022 with strong growth of 10.5% organically in Q1, as it reported €2.80 billion (A$4.10 billion) net revenue, up from €2.39 billion (A$3.5 billion) in Q1 2021.
  • Today, the French multinational’s stock traded at 51.76 EUR, up 0.39% after market closed at 51.56 EUR.
  • Publicis Groupe has traded at a 12-month low of $13.17 and a 12-month high of $19.25.
  • Publicis Groupe’s Paris-listed stock declined 7.4% following Snap’s profit warning last week.

Havas Media Group:

  • Vivendi, French holding company of subsidiary Havas, traded at 11.03 EUR today, up 0.32% after markets closed at 11.00 EUR.
  • Havas Group made a strong start to the year with Q1 reporting revealing double-digit organic growth. For the first quarter of 2022, revenues were €591 million (A$881 million), up by 17.7% compared to the first quarter of 2021
  • Havas experienced organic growth of 11.4% (compared to organic growth of -0.8% in the first quarter of 2021), a 4.4% currency effect and a 2.2% contribution from acquisitions.
  • This performance is indicative of strong commercial momentum achieved in recent quarters, boosted by the launch of innovative new offerings (notably Havas CX and Havas Market).

NewsCorp:

  • News Corp’s first quarter results reported revenues of US$2.49 billion in the quarter – a record for third-quarter revenue, and a 7% increase compared to US$2.34 billion (A$3.2 million) in the previous year.
  • The hike in revenues can be attributed to a rebound in the advertising market, new content licensing revenues and strong digital subscriber gains.
  • Interestingly, the conglomerate did not appear to suffer significantly as a consequence of Snap’s announcement last week.
  • NWS stock trades at 24.92 AUD today, up 2.57% after markets last closed at 24.29 AUD.

Dentsu:

WPP:

  • WPP stock fell by 8.7% last Tuesday following the Snap crash, making the company another example of legacy media stock dragged down by Snap’s ominous profit warning last week.
  • WPP stock is currently trading at 926.40 GBX, up 0.78% after markets closed at 919.20 GBX.
  • WPP has a one year low of $57.61 and a one year high of $83.69. The business has a 50-day moving average price of $64.40 and a two-hundred day moving average price of $71.17.

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