Social media companies are seeing immense drops in their shares this year.
So far, the shares of Facebook and Instagram have plummeted by more than 40% this year. This comes with the new changes of Facebook, like Mark Zuckerberg’s rebranding of the company to Meta and his plans to enter the metaverse.
Zuckerberg also has to face these transitions and challenges without his COO, Sheryl Sandberg, who announced her would-be graceful exit from the company last week. According to an official statement, Sandberg will be leaving Facebook this July.
Meanwhile, Snapchat’s shares plunged over 70% this year. Pinterest lost half its value, and even media giants like Alphabet, Google’s owner, and Youtube experienced a 20% downswing in their stocks.
Twitter also joins the fold with an 11% drop – that’s on top of the current issues surrounding the company that involves Elon Musk.
Despite higher growth rates than traditional media companies, owners have realized that they are still subject to shifts from fickle audiences that change preferences every now and then.
Several factors have led to the downhill trend that the companies are experiencing lately. Changes to Apple’s privacy tracking issues, social media stocks have dropped sharply, and the rise of new competitors in the market.
Tiktok as a new player
At the current, TikTok is taking center stage, with millions of subscribers around the world entertained by all kinds of video content posted by its users. TikTok has successfully got younger Millennial and Gen Z rallying behind them.
Ali Mogharabi, a Morningstar analyst, said that Alphabet’s earnings went down because of increasing competition from other media sites like Snap, Twitter, Meta, and Pinterest – “plus newcomers like TikTok.”
TikTok has also gained traction among company giants, which could not mean well for other companies.
“We continue to focus on social platforms relevant to the younger Gen Z consumer,” Stefan Larson, CEO of Calvin Klein, said in a call. The company recently trended in TikTok for the #onlyinmycalvins movement that was participated by many and gained “significant viewership” in over ten countries.
Estee Lauder’s new mascara brand MACStack also went into the limelight after it went viral on TikTok. CEO Fabrizio Freda said that the sales of the mascara “far exceeded our expectations in the quarter.” The view featuring their mascara generated 153 million views and counting – getting the attention of Gen Z and Millennial consumers.
Other companies have also considered the profitability and potential of TikTok too.
“TikTok is clearly showing up and making a really big impact,” said Philippe Krakowsky, the CEO of the marketing firm Interpublic.
