Monday markets: S4 Capital slumps, social media stocks drop
After Wall Street closed last week with a rally, supported by better-than-expected US Q2 earnings reports and retracement in long-term interest rates, the ASX is set for a weak opening today. Disappointing revenues have been reported in tech stocks, and a significant slump in S4 Capital sees the company lose its coveted ‘unicorn’ status after releasing an ominous profit warning.
Social media and tech stocks have dived following a slump in advertising demand. Twitter and Snap have reported disappointing earnings, and S4 Capital, the post-WPP holding company founded by Sir Martin Sorrell adjusts its target revenue growth after drastically missing market expectations in its earnings.
S4 Capital chair, Sir Martin Sorrell (pictured)
Pinterest plunged 11%, Meta plunged over 5%, Alphabet dropped more than 3%, with the companies in addition to Snap and Twitter set to collectively lose $42 billion in market value. This week will also see earnings reports from U.S tech companies Microsoft, Google, Meta Platforms, Apple and Amazon released.
The ASX is poised to open a little flatter this morning following the tumult in tech stocks and Wall Street over the weekend. Read on for a news wrap of the financials of the world’s biggest advertising, media and marketing companies.
S4 Capital:
- Sir Martin Sorrell’s S4 Capital has issued a profit warning on Thursday, noting that it will undergo “significant cost reduction measures, including a brake on hiring,” as the company revealed rising costs are impacting earnings within its content practice.
- Earnings for this year are now forecast to be £120m, versus the approximate £160 figure expected by the market.
- The company’s strategy has been called into question as investors speculate the future of the alarmingly fast-growing business, which has seen a 30% fall in share price back in April, and a 44% fall in share price following the recent profit warning.
- S4’s market capitalisation has now dropped down to £700m, equating to AU$1.2bn and US$840m, invalidating the ‘unicorn status’ the company brandished on its website.
- S4 has claimed it will decrease its expectations for its target EBIDTA to approximately £120 million whilst maintaining a target of 25% net revenue growth
News Corp:
- News Corp’s share price has tumbled today, sitting at 24.50 AUD, a fall of −0.58
- As pundits await the company’s Q2 and H1 earnings, the stocks reflect a significant -23.68% drop in value in the YTD.
Twitter:
- Twitter has taken Elon Musk to court, demanding the roguish billionaire rectify the damage he caused through his withdrawal of a $44 million bid for the company.
- The two titans are set to battle it out in the courtroom in a trial beginning in October.
- Twitter has reported a fall in quarterly revenue, blaming a weakened ad market (“advertising industry headwinds”) and Musk for the will-he-won’t-he buyout saga.
- In addition to inciting internal chaos at Twitter, the fallout from the deal has worried Twitter’s advertisers about the platform’s reliability and stability as an advertising vehicle.
- Advertising revenue rose just 2% to US$1.08 billion, missing Wall Street’s expectations of $1.22billion.
- Total Q2 revenue was US$1.18billion – analysts expected $1.32 billion.
Meta:
- Meta stocks plunged over 5% on Friday as part of a collective tech stock nosedive.
- According to new court filings, Mark Zuckerberg, CEO of Meta, will face a six-hour deposition over the way the company handled user data relating to the Cambridge Analytica scandal.
- Former COO Sheryl Sandberg will also face a five-hour deposition as part of the court’s discovery process.
- Meta’s share price is today trading at 169.27 USD, a drop of −13.90 USD (7.59%) in value.
- Just last Thursday, Meta was trading at 183.17USD, marking a significant drop since Friday.
Dentsu:
- Dentsu stock is trading at 4,510 JPY today, a drop of
- In the YTD, Dentsu has seen an impressive 8.41% increase in value of its share price.
- Dentsu International last week announced the appointment of Robert Gilby as APAC CEO, following the global launch of DENTSU CREATIVE, with Dentsu awarded Asia Pacific Regional Network of the Year at Cannes.
Vivendi:
- Vivendi’s share price has seen an increase of +0.014
- Havas Media Melbourne announced last week it has been appointed as the media agency for Accolade Wines.
WPP:
- The WPP share price is trading at 871.08 GBP today, an increase of +1.28, or 0.15% in value since markets closed.
- WPP last week announced the acquisition of Latin American ecommerce agency Corebiz.
- WPP has seen a not-so-impressive fall of 23.99% in its share price in the YTD, as investors await their Q2 earnings report.
Publicis Groupe:
- Publicis released its Q2 2022 and H1 results last Thursday, with growth and revenue figures at an ‘all time high’.
- Publicis Groupe reported net revenue for the first half of €5.873bn (approximately AU$8.7bn), up by 19.1% year on year.
- EBITDA profit for the half was €1.287 (AU$1.9bn), up 22.3%.
- Net revenue in Asia Pacific was +14.2%, supported by the new Pepsi creative account in India. Despite lockdowns in several cities, China was positive at +2.7% organic growth, supported by new business wins.
Omnicom Inc.:
- Omnicom Inc. reported its Q2 2022 results last week for the quarter ending June 30, 2022. The results found a double-digit global revenue growth of 11.3%, with reduced growth in Asia Pacific negatively impacted by COVID-19 lockdowns in China.
- Q2 revenue of US$3.567bn, a notably stable figure since 2021 was reported, denoting slower growth.
- Omnicom’s share price currently sits at 68.96 USD today, a drop of −0.27 (0.39%) in value.
- 4.7% organic growth was seen for the Asia Pacific region.
- Profits had seen a slight decrease, from US$589.6m to US$562.4m.
- The conflict in Russia continues to pose a threat to revenues and performance in Europe, with acquisition revenue, net of disposition revenue, seeing a decrease of $239.8 million, or 6.7%.
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topics
buyout
Dentsu
Elon Musk
Meta
News Corp
Publicis
Rupert Murdoch
S4 Capital
Sir Martin Sorell
Twitter
WPP
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