As if it were a magic trick tonight (10-20-2002) on Wall Street, 40,000 million dollars have vanished. These 40 billion belonged to social networks. And, it is that social networks are not immune to the context in which we live.
Snapchat: plummets 27%
Snapchat «the social network of the ghost» created by Evan Spiegel, Bobby Murphy and Reggie Brown, when they were students at Stanford University (United States), was the first of the large social networks to publish results in the fourth quarter of the year.
Snap shares have lost about 77% of their value so far this year.
Why have social networks collapsed last night?
The explanation is very simple, it is due to inflation.
Revenue from social media is due to advertising companies. In this context of inflation in which we are: the expense and budget of companies has been reduced.
The domino effect of the fall of social networks
Alphabet, parent of YouTube, Meta Platform and Pinterest fell between 2% and 7%.
Twitter plummeted 5%, also dragged down by concerns about security reviews of billionaire Elon Musk’s takeover bid. But, I will talk about Twitter later.
Why shouldn’t we be invested in social media?
Many people in the period that the pandemic lasted, observed how social networks lived a golden age.
It was logical, since we were confined to our homes and with too much free time.
With too much free time; people spend their time on things that give them an ephemeral lightness. That’s what social media was for.
Too many things were bought online, a paradise for social networks that were full of offers from advertisers.
Many offers and many clients, everything was going from strength to strength.
But, as in life, the wind constantly changes direction.
We came out of the pandemic, and suddenly… the Ukraine war; consequently the debt crisis generated by the previous two.
The context changed to a context of crisis, of inflation.
Obviously, after the pandemic we should not be invested in social networks.
The disastrous year of social media
Snap shares have lost about 77% of their value so far this year, while Alphabet, Meta and Pinterest have lost between 30% and 60%.
Twitter, however, has gained 21% on the prospect of Elon Musk buying the company.
The future of social networks
Snapchat was the first to publish this fourth quarter of the year, but when the others do, the results will be similar.
They will be more or less analogous in proportion to the fall so far this year, since the context is exactly the same.
Elon Musk and his Twitter
As I mentioned before, Twitter has gained 21% so far this year.
This rise in opposition to the rest of the social networks, is due to the prospect that the billionaire Musk buys the company.
However, the mediatic Musk acknowledges that buying Twitter at the price he is going to pay is expensive.
On the other hand, The Washington Post newspaper published this Thursday that Elon Musk plans to fire 75% of the Twitter staff.
One of the virtues of the Praetorian is to be a fan of efficiency.
Quickly, the general counsel of the social network came out to deny the news.
Twitter to adjust its valuation and adjust to the reality of the market and its income, the social network must lay off part of its staff.
The success of WeChat
Basically WeChat works like Facebook, LinkedIn, Uber, Instagram and other apps in one. For many Chinese, WeChat is indispensable in keeping in touch around the world.
WeChat is owned by Tencent, the largest technology company in China and the largest gaming company in the world.
As of September 2021, Tencent reported that WeChat has 1.263 million monthly active users.
What Musk really wants is to turn Twitter into the Wechat of the West.
If he really gets it he could multiply his investment by 10.
It is not unreasonable to think that Musk is considering laying off 75% of the workforce.
Miscellany
When you live in a period of uncertainty, you live in a period of opportunity.
In uncertainty, there is more than ever the certainty of chance, and the only way to anticipate the future is to scrutinize the past extensively.
I suggest that you do not get carried away by the prevailing wind, and do so by the wind that you can generate.
«Calm reasoning, even extremely calm reasoning, is much better than desperate decisions.» Franz Kafka
David EPC ©
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