Snap, Twitter, and Pinterest sink as Facebook parent Meta's Q4 earnings shock hits social media stocks

• Snap, Twitter, and Pinterest fell Thursday after Facebook parent Meta's earnings miss rattled social media stocks.
• Snapchat's owner tumbled as much as 19%, while Twitter and Pinterest lost more than 7%.

Snap, Twitter, and Pinterest dropped sharply in regular trading Thursday after Facebook parent Meta's fourth-quarter earnings failed to meet Wall Street analysts' expectations.

Social-media heavyweight Meta's stock was last down 23.5% at $246.95 a share, after reporting its user numbers fell for the first time ever.

Facebook's daily active users dropped to 1.93 billion, lower than the average of 1.95 billion that analysts had been expecting. Metaverse-related losses came in at $10 billion, and Meta forecast lower-than-expected revenue for the first quarter.

Thursday's decline wiped out $230 billion from Facebook's market value, in its worst one-day loss since its stock market debut in May 2012.

Meta's earnings shock triggered a slide in social media stocks, with Snap tumbling as much as 19%. Twitter and Pinterest each fell 6% at the market open.

Social media wasn't the only sector that got hurt. Amazon lost 6% ahead of its own results on Thursday. Google parent Alphabet recovered after initially dropping in the premarket session.

The size and reach of Meta, a major bellwether for tech players, likely points to a future recovery for the stock, analysts said. But investors who don't trade on long-term outlook are likely to lose enthusiasm for it.

Short interest in Meta as of Thursday stood at $9.2 billion, equal to about 1.2% of the company's float, according to data from S3 Partners.

Market participants had hoped techs' recent poor form would prove to be a temporary upset, said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

"But now, investors are bracing for another round of pummelling as fears rise again about the prospects of tech stocks which have been the darlings of Wall Street," she added.

Futures on the Nasdaq dropped 2.3% on Thursday, reflecting the weight of Meta on the tech-heavy index.

"From time-to-time Meta messes up its shareholder communications in a big way, and its fourth-quarter earnings yesterday was one of those times," Martin Garner, CCS Insight analyst, said.

Garner said Meta is wrestling five big issues: Apple's privacy changes in 2021 are hurting its ad sales, user growth has slowed sharply, and users shifting their content posting to short-form video.

"Meta is a long way behind TikTok on short-form video; and — at the same time — Meta is investing billions of dollars in the metaverse," he added.

Garner said CEO Mark Zuckerberg tried to reassure shareholders that Facebook always comes out stronger. But TikTok's strength and speed of growth as a competitor ushers a new dynamic for the company: that of "real competition in a core product area."

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