Let’s dig into the relative performance of Meta (NASDAQ:META) and its peers as we unravel the now-completed Q2 social networking earnings season.
Businesses must meet their customers where they are, which over the past decade has come to mean on social networks. In 2020, users spent over 2.5 hours a day on social networks, a figure that has increased every year since measurement began. As a result, businesses continue to shift their advertising and marketing dollars online.
The 5 social networking stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 2.2% while next quarter’s revenue guidance was 0.9% above.
Inflation progressed towards the Fed’s 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut’s timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
While some social networking stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4% since the latest earnings results.
Meta (NASDAQ:META)
Famously founded by Mark Zuckerberg in his Harvard dorm, Meta Platforms (NASDAQ:META) operates a collection of the largest social networks in the world – Facebook, Instagram, WhatsApp, and Messenger, along with its metaverse focused Reality Labs.
Meta reported revenues of $39.07 billion, up 22.1% year on year. This print exceeded analysts’ expectations by 2%. Overall, it was an impressive quarter for the company with an impressive beat of analysts’ EBITDA estimates and strong sales guidance for the next quarter.
“We had a strong quarter, and Meta AI is on track to be the most used AI assistant in the world by the end of the year,” said Mark Zuckerberg, Meta founder and CEO.
Meta scored the fastest revenue growth of the whole group. The company reported 3.27 billion daily active users, up 6.5% year on year. Unsurprisingly, the stock is up 19.6% since reporting and currently trades at $567.41.
We think Meta is a good business, but is it a buy today? Read our full report here, it’s free.
Best Q2: Nextdoor (NYSE:KIND)
Helping residents figure out what’s happening on their block in real time, Nextdoor (NYSE:KIND) is a social network that connects neighbors with each other and with local businesses.
Nextdoor reported revenues of $63.29 million, up 11.3% year on year, outperforming analysts’ expectations by 8.5%. The business had a very strong quarter with an impressive beat of analysts’ EBITDA estimates and optimistic revenue guidance for the next quarter.
Nextdoor delivered the biggest analyst estimates beat among its peers. The company reported 45.1 million monthly active users, up 8.4% year on year. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 4.8% since reporting. It currently trades at $2.39.
Is now the time to buy Nextdoor? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Snap (NYSE:SNAP)
Founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, and originally called Picaboo, Snapchat (NYSE: SNAP) is an image centric social media network.
Snap reported revenues of $1.24 billion, up 15.8% year on year, falling short of analysts’ expectations by 1.1%. It was a slower quarter as it posted underwhelming EBITDA guidance for the next quarter.
Snap delivered the weakest performance against analyst estimates in the group. The company reported 432 million daily active users, up 8.8% year on year. As expected, the stock is down 20.4% since the results and currently trades at $10.19.
Read our full analysis of Snap’s results here.
Pinterest (NYSE:PINS)
Created with the idea of virtually replacing paper catalogues, Pinterest (NYSE: PINS) is an online image and social discovery platform.
Pinterest reported revenues of $853.7 million, up 20.6% year on year. This result was in line with analysts’ expectations. Aside from that, it was a mixed quarter as it also produced a decent beat of analysts’ EBITDA estimates but underwhelming revenue guidance for the next quarter.
The company reported 522 million monthly active users, up 12.3% year on year. The stock is down 15.2% since reporting and currently trades at $31.69.
Read our full, actionable report on Pinterest here, it’s free.
Yelp (NYSE:YELP)
Founded by PayPal alumni Jeremy Stoppelman and Russel Simmons, Yelp (NYSE:YELP) is an online platform that helps people discover local businesses through crowd-sourced reviews.
Yelp reported revenues of $357 million, up 5.9% year on year. This result surpassed analysts’ expectations by 1.1%. It was a strong quarter as it also logged an impressive beat of analysts’ EBITDA estimates.
Yelp had the slowest revenue growth among its peers. The stock is flat since reporting and currently trades at $33.78.
Read our full, actionable report on Yelp here, it’s free.
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