Snap Hopes For Ad Windfall as Brands Flee Elon Musk’s Twitter
Investors in Snap Inc., one of the smaller social media networks, may be among the biggest beneficiaries of Twitter's loss of advertisers.
Twitter could lose almost a third of its ad revenue as brands pull back from the site, according to estimates from MKM Partners LLC. Meta Platforms Inc.'s Instagram and Facebook would win the biggest chunk of that business, though the incremental sales would be about 1% of Meta's total revenue, MKM says.
However, that same revenue would make a big difference for the Snapchat parent's much smaller operation, and possibly help revive the stock, which has lost more than three quarters of its value this year.
“What is bad for Twitter might actually be good for Snapchat,” said Dennis Dick, market structure analyst and head trader at Triple D Trading Inc.
Companies including Volkswagen AG, General Mills Inc. and Pfizer Inc. have scaled back or stopped advertising on Twitter, concerned that new owner Elon Musk's looser moderation policies will make the site less hospitable. General Motors CEO Mary Barra told CNBC in an interview on Tuesday that the automaker continues to evaluate advertising on Twitter following its suspension.
Musk has acknowledged that the defections led to a “massive drop” in revenue. He said over the weekend that Apple Inc., the largest advertiser on the platform, has “fully resumed” business with Twitter after mostly stopping a few days earlier.
To be sure, any benefit that Snap enjoys from the pullback on Twitter advertising may be offset by the broader economic gloom. Dick said he's concerned the overall digital ad pie might get smaller in 2023, and analysts agree that a weakening economy is prompting businesses to cut down on costs, including ad spending.
Snap could
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