Social media stocks, including Meta, Snap, Pinterest, and Reddit, experienced a sharp decline following President Trump's unexpected announcement of a tariff plan. Investors reacted negatively, particularly due to concerns over reduced digital advertising budgets amid increased economic uncertainty. Forecasts for ad spending growth in 2025 were already being lowered, and many ad decision-makers expressed anxiety about tariff impacts. Analysts predict that smaller companies will suffer more from these changes, with larger entities like Google potentially remaining more resilient.
"We expect higher tariffs to have a negative impact on enterprise budgets, which will trickle down to ad-based platforms," CFRA analyst Angelo Zino stated, emphasizing that smaller platforms like Pinterest and Snap will face more immediate pain.
Stifel analyst Mark Kelley warned that 'digital ads volatility is definitely back, leaving us more concerned about forward guidance across our ad-based names,' highlighting growing uncertainty in the market.
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