Business

Online advertising feels the weight of macro concerns – MKM (NASDAQ: GOOGL)

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Online advertising names – famous Internet giants including Alphabet (GOOG) (NASDAQ:GOOGLE), Meta Platform (NASDAQ:Facebook), Twitter (NYSE:TWTR), Take a shot (NYSE:SNAP) and Pinterest (PINS) – is facing macroeconomic volatility ahead, said MKM Partners, and it is cutting its Q1 estimates accordingly.

“We believe online advertising. Companies are facing four increasing macro whirlwinds: (1) the direct impact of the Russia/Ukraine war; (2) the indirect and likely impact of the war. contagion from war into Europe; (3) spending on soft brand advertising, especially around analyst Rohit Kulkarni says: geopolitical content; and (4) likely impact from spending Consumer spending is soft in Europe, due to inflation and higher oil prices.

Kulkarni noted that the outlook for the domestic advertising market could decline by 1% based on the Ukraine conflict, and that MKM sees the potential for more impact on the European advertising market.

The analyst said ad spend has grown rapidly globally in 2021 amid reopenings and continued penetration of online advertising. For 2022, there will be a slowdown, especially in the first half, due to difficult year-to-year comparisons – and US spending will fall to 9-11% growth. (In the second half, when comparisons are easier, that will accelerate — and the midterm elections will add about 2% of incremental spending, the company said.)

Industries that are expected to spend more on advertising this year include Technology, Telecommunications, Media & Entertainment, and Travel; The sectors expected to decline (based on supply chain reasons/inflation) are Automotive, Real Estate and Consumer Products.

Accordingly, MKM is cutting its 2022-2023 revenue expectation for Alphabet (GOOG) (GOOGLE) is 1% and income from business is 2%. For Meta (Facebook), it slashed its revenue estimates for 2022 by 3% and for 2023 by 8%, and earnings per share by 6% and 15%, respectively. And for Pinterest (PINS), it cuts revenue/EBITDA by 1% in 2022 and revenue in 2023 and EBITDA by 7% and 8% respectively.

It also slashed price targets for a number of names. Above GOOGLE, which was a slight drop to $3,300 from $3,375, implying a 30% increase. For Meta (Facebook), it is dropping its target to $315 from $365, implying a 50% rally from here. And for Pinterest (PINS), it is cutting its target to $38 from $42, implying a 71% gain.

The company has a Buy rating on all names except Twitter (TWTR), where it is Neutral. It leaves it SNAP Price target unchanged at $47, implying a 42% increase. And its Twitter target is unchanged, at $49, implying a 9% gain.

Twitter’s (TWTR) Takeover drama continues: Billionaire Elon Musk is said to be considering soliciting partners about a hostile bid against the company.

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