As the Q4 earnings season wraps, let’s dig into this quarter’s best and worst performers in the social networking industry, including Nextdoor (NYSE:KIND) and its peers.
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 6 social networking stocks we track reported a satisfactory Q4. As a group, revenues beat analysts’ consensus estimates by 2.4% while next quarter’s revenue guidance was 1% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 11.9% since the latest earnings results.
Weakest Q4: 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 $65.23 million, up 17.4% year on year. This print exceeded analysts’ expectations by 1.6%. Despite the top-line beat, it was still a slower quarter for the company with a significant miss of analysts’ number of weekly active users estimates and EBITDA guidance for next quarter missing analysts’ expectations significantly.
Unsurprisingly, the stock is down 28.9% since reporting and currently trades at $1.77.
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Best Q4: 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 $1.56 billion, up 14.4% year on year, outperforming analysts’ expectations by 0.6%. The business had a strong quarter with an impressive beat of analysts’ EBITDA estimates and solid growth in its users.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 11.7% since reporting. It currently trades at $10.26.
Yelp (NYSE:YELP)
Founded by PayPal (NASDAQ:PYPL) 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 $362 million, up 5.7% year on year, exceeding analysts’ expectations by 3.3%. Still, it was a mixed quarter as it posted full-year EBITDA guidance missing analysts’ expectations.
Yelp delivered the slowest revenue growth in the group. As expected, the stock is down 15.4% since the results and currently trades at $34.31.
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 $48.39 billion, up 20.6% year on year. This result topped analysts’ expectations by 2.9%. Zooming out, it was a mixed quarter as it also recorded an impressive beat of analysts’ EBITDA estimates but revenue guidance for next quarter missing analysts’ expectations.
The company reported 3.35 billion daily active users, up 5% year on year. The stock is flat since reporting and currently trades at $670.92.
Reddit (NYSE:RDDT)
Founded in 2005 by two University of Virginia roommates, Reddit (NYSE:RDDT) facilitates user-generated content across niche communities (called subreddits) that discuss anything from stocks to dating and memes.Reddit reported revenues of $427.7 million, up 71.3% year on year. This print surpassed analysts’ expectations by 4.6%. Aside from that, it was a satisfactory quarter as it also logged EBITDA guidance for next quarter exceeding analysts’ expectations but a significant miss of analysts’ number of domestic daily active visitors estimates.
Reddit achieved the biggest analyst estimates beat and fastest revenue growth among its peers. The company reported 48 million daily active users, up 31.9% year on year. The stock is down 24.7% since reporting and currently trades at $162.96.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.Want to invest in winners with rock-solid fundamentals? Check out our and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
This content was originally published on Stock Story
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