Facebook Shines in Q1 Earnings, While Snap Fails to Impress: A Review of Social Networking Stocks
As the Q1 earnings season draws to a close, let's take a closer look at the best and worst performers in the social networking industry, including Facebook (NASDAQ: FB) and its peers. In the past decade, businesses have increasingly recognized the importance of being present on social networks to reach their customers, and this trend has only intensified. In 2020, users spent over 2.5 hours a day on social networks, a figure that has been steadily increasing since measurement began. As a result, businesses continue to shift their advertising and marketing budgets online. The 6 social networking stocks we track reported a strong Q1. As a group, revenues beat analysts' consensus estimates by 2.4%, while next quarter's revenue guidance was 0.9% below. Fortunately, the share prices of these companies have been resilient, with an average increase of 9.7% since the latest earnings results. Facebook is a social networking platform that allows users to share updates, photos, videos, and links with their friends and followers. The company reported revenues of $29.03 billion, up 6% year on year, outperforming analysts' expectations by 2%. Facebook also delivered a strong quarter with an impressive beat of analysts' EBITDA estimates and a solid beat of analysts' number of monthly active users estimates. Facebook CEO Mark Zuckerberg said, "We continue to invest in our mission to connect people and build a more open and connected world." The company reported 2.96 billion monthly active users, up 4% year on year. Interestingly, the stock is up 12.5% since reporting and currently trades at $338.75.
Worst Q1: Snap (NYSE: SNAP) Snapchat (NYSE: SNAP), founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, is an image-centric social media network. The company reported revenues of $1.36 billion, up 14.1% year on year, but missed analysts' expectations by 1.3%. Despite this, Snap had a strong quarter with a solid beat of analysts' EBITDA estimates.
However, the market seems unhappy with the results as the stock is down 10.4% since reporting and currently trades at $8.15. Is now the time to buy Snap? Access our full analysis of the earnings results here, it's free.
Market Update In response to the Fed's rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed's 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump's presidential win in November sparked additional market gains
