If you were a holder of Twitter shares, you're probably smiling from ear to ear bagging that premium from the Elon takeover, especially considering the battering social media and digital advertising platforms are taking in the market of late. As the world moves out of the stay-at-home trend and we get back to meat space, trading the metaverse for personal interaction, we're seeing capital follow too.
Digital stocks were the darlings of the pandemic years with many turning to them for goods, services, and entertainment, but now that this is over, we would see a correction. A lot of fo capital that was funneling into online stores is funneling back to the remaining local stores.
We're also seeing commodity and supply chain issues affecting big business meaning they only have so much capacity, and when you can't work at full tilt, you're going to be cutting your advertising.
Meta
If we look at the granddaddy of social engineering online we can see that it's down 38% YTD, trading like a shitcoin if you ask me. At a PE of 15 for a tech stock, it's pretty reasonable and it could bounce back, but that doesn't mean there isn't more room for pain.
Facebook just seem out of ideas, After a failed attempt or 2 at issuing a stablecoin and now the play for metaverse, it just screams desperation for a company that hit its peak ages ago and relied on acquisitions to keep it going.
I am pretty sure if Instagram and WhatsApp didn't sell Facebook would have been way smaller than it is today and with Tiktok stealing users and time of users every day Facebook have some serious problems on its hands.
Every mom's favorite digital dream board, Pinterest, still has not found a way to properly monetise, it has traffic, and ads in certain parts of the world but has yet to roll out worldwide. Building an ad platform isn't as easy as it sounds and supporting global payments is a pain in the arse.
Yes they are still seeing growing numbers of users as they expand outside the US and ad revenue is increasing, it's still not enough to warrant a PE of 38.
If they offered a pre-paid voucher credit system and allowed you to pay with bitcoin, I think they could get a lot more paid traffic coming through their network.
Snapchat
The world's biggest dick pic app at one time has surprisingly stuck around despite competition from simping apps like onlyfans. there hasn't been much going on with Snapchat and im pretty sure Instagram and Tiktok migrating Snaps best features killed its USP ages ago.
I still think the only way out for Snap is to sell off to Facebook, and I still think it's on the cards. Facebook needs new user juice and Snap needs a better ad platform, so it makes sense to join Meta.
Alphabet
If you want to tell if advertising is drying up online look no further than Google, sure it's not as reliant on ads as Facebook's 97% reliance, but it's still a massive part of their business and it subsidizes a lot of what they do in other departments.
Ads are not only in Google search, but display networks, partner search engines, in-app ad networks, Gmail ads, and of course YouTube. Brands simply don't have the cash to fight it out for clicks online and we've seen a drop in revenue from ads with Google and YouTube, and when it's your bread and butter, shareholders tend to get worried.
Traffic needs to be repriced
Website traffic has been overvalued in the past 2 years as people were spending so much time on their hands, as the value of traffic gets repriced and eyeballs move offline, it's going to put pressure on these services.
How they innovate their way out of it is anyone's guess, but I think it's an important sector to watch in the future as a lot of people are still heavily invested in the outcome of these networks.
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