How Will Alphabet, Meta Platforms Shares React To Earnings Following Snap's Collapse?

Zinger Key Points
  • Josh Brown says Snap's main problem is idiosyncratic, but Alphabet and Meta are still sailing into choppy waters.
  • "Ad budgets are among the first things to get cut when there's massive uncertainty ... so yeah, I think both are susceptible," Brown says.

Shares of several digital advertising names, including Alphabet Inc GOOG and Meta Platforms Inc META, traded lower last week on Snap Inc's SNAP disappointing earnings results.

So is the collapse in Snap stock foreshadowing the fate of Alphabet and Meta heading into earnings?

What To Know: Ritholtz Wealth Management's Josh Brown acknowledged that he's worried about the pair of digital advertising stocks heading into their reports, but some of the problems Snap is facing won't impact Alphabet or Meta, he said Monday on CNBC's "Fast Money Halftime Report."

"I happen to think Snap has got an idiosyncratic problem, which is that their user base does not consume ads when they use it for messaging and that's really all it's good for," Brown said. 

"They actually are the only social media network that's worse than Twitter at monetizing usage. I don't think that applies to Meta. I don't think that applies to Alphabet."

See Also: Meta Platforms Analyst Expects Company To Report Negative Revenue Growth For The First Time

On the other hand, the overall ad spending environment is meaningful for Alphabet and Meta because the companies have grown so large that they are no longer growing on a secular basis and taking share from the competition, he said. 

"They are both now large enough that the cyclical is going to impact them. Ad budgets are among the first things to get cut when there's massive uncertainty ... so yeah, I think both are susceptible," Brown said.

The good news for investors is that both stocks are so far off their highs that a slowdown in ad spending may already be priced in, he noted. 

Alphabet is down about 25% year-to-date. The company is set to report second-quarter financial results after the market closes on Tuesday. Analysts expect Alphabet to earn $1.31 per share on quarterly revenue of $70.35 billion, according to data from Benzinga Pro.

Meta is scheduled to report after the market closes on Wednesday. The company is expected to earn $2.61 per share on quarterly revenue of $28.97 billion. Meta shares have been cut in half since the start of the year. 

GOOG, META Price Action: At publication Monday, Alphabet was down 0.57% at $107.76 and Meta was down 2.20% at $165.54.

Photo: Gerd Altmann from Pixabay.

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