, Twitter will emerge out of takeover talks into a moderately to severely depressed market for ads with a share price that’s a fraction of what Musk said he’d pay. Such a scenario is what you might metaphorically call “out of the frying pan, into the bonfire.”
Even with a decreased appetite for ads among marketers, many Big Tech companies are going to do just fine—even if their shares take some hits in the next few months as they did on Monday and have over recent weeks. It’s easy enough to identify who falls into this category. These companies throw off lots of cash and sport fat profits.
Speaking of portly profits, you’ll find nothing of the kind at Snap, and here’s where we can get to our second narrative, the Snap-specific one. Snap is more likely to have a tough time of it as the markets continue to churn, more than, say, Meta, which also has an ads-challenged revenue model but also did $39.4 billion in profit last year.
By being the one of the first companies to talk about a worse-than-expected second quarter, Snap hopes to get out in front of things and possibly save itself from an even sharper decline in its stock over the next few months. Or even more pain when its peers start fessing up to how bad it's been for them. Wall Street and institutional investors do not like surprises during earnings season, and the early release of the figures tries to avoid such a fate.
Monday at a JPMorgan Chase conference. How well Snap and the others navigate through those headwinds—and the clarity they give to Wall Street and other investors about their problems—will dictate who else goes over the edge and how long it’ll take Snap to climb back up.
Hmmm…
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