Happy Tuesday! Social media stocks can serve as a global growth proxy. They’re not just tech names that thrive in the growth dominated rallies we’ve come to know in the last decade. Now, they serve as beacons of how businesses are thinking about the consumer. After all, most if not all of their revenue comes from spending on advertising. But if a business is concerned about whether or not consumers are in fact going to spend at all, what’s the likelihood they increase ad budgets?Then there’s the supply side. If companies can’t produce at capacity due to shortages, then why advertise product that isn’t there? That’s the worry among the likes of Snap CEO Evan Spiegel who said “the macroeconomic environment has definitely deteriorated further and faster than we expected.” The comments are in line with the broader slowdown narrative across the board. But zoom out further, and it’s clear the issue is more than just about a deceleration. Today’s Chart of the Day looks at social media stocks, that are now trading at pre-pandemic levels. Investors are pricing in recession odds, and erasing the gains the sector made even though both Snap and the economy are still growing, just slower.
You can catch the Chart of the Day segment at 5:45am NYT this week on Bloomberg Surveillance: Early Edition. Next week, it returns to it’s normal slot at 7:45am NYT. If you have a Terminal subscription, enter G #BTV 5223 in the search bar. If the chart is not visible, it is also attached to the email.