Macroeconomic and geopolitical headwinds have affected the stock market this year. The Fed’s aggressive rate hikes have had a significant impact on high-growth tech stocks.
The tech-heavy Nasdaq Composite is down 28.5% for the year. Several Internet stocks missed earnings estimates due to macroeconomic issues. And many of them recently announced layoffs and hiring freezes to cut costs.
Fed Chairman Powell has warned that the final level of interest rates will be higher than expected, leading many economists to believe that the economy will enter a recession next year. As corporations cut advertising spending and consumers avoid discretionary spending, the recession could further affect the profitability of Internet companies.
Given this backdrop, it would be wise to sell Snap Inc.’s fundamentally weak Internet stock.SNAP), IAC Inc. (IAC), Zhihu Inc. (ZH) and ContextLogic Inc. (REQUEST).
Snap Inc. (SNAP)
SNAP operates as an international camera company. It offers Snapchat, the popular camera app that allows people to communicate visually through short videos and pictures. It launches Spectacles, an eyewear product that integrates with Snapchat, and offers promotional products.
For the fiscal third quarter ended September 30, 2022, SNAP’s non-GAAP net income fell 50.8% year-over-year to $132.06 million. Its adjusted EBITDA fell 58.3% year-over-year to $72.64 million, non-GAAP EPS It fell to $0.08, down 52.9% from the prior year quarter.
For the quarter ending December 31, 2022, SNAP’s EPS is expected to decline 45.8% year-over-year to $0.12. Over the past year, the stock has fallen 79.9% to close the last trading session at $11.07.
SNAP’s weak foundations are reflected in itself POWR ratings. The stock has an overall rating of D, which equates to Sell in our proprietary rating system. The POWR ratings evaluate stocks against 118 different factors, each with its own weight.
Inside the F rating Internet ranked 53rd out of 59 stocks in the industry. The company is rated F for Growth and D for Momentum, Stability, Emotion and Quality.
Click here See SNAP’s rating for value.
IAC Inc. (IAC)
IAC operates worldwide as a media and internet company. The company publishes original and engaging digital content in the form of articles, illustrations, videos and images. It also operates a digital marketplace connecting home service professionals with consumers under the brands Angi Ads, Angi Leads and Angi Services.
For the third fiscal quarter ended September 30, 2022, IAC’s total assets were $10.44 billion, down 15.1% from $12.30 billion for the fiscal year ended December 31, 2021. Its total operating loss increased by 288.8% year-on-year to $1,124 million. , while total operating costs and expenses increased 49.1% year-over-year to $1.42 billion.
Its net loss attributable to IAC shareholders was $63.82 million, compared to net income attributable to IAC shareholders of $60.69 million. Additionally, its loss per share was $0.74 compared to EPS of $0.65.
For the quarter ending December 31, 2022, IAC’s EPS is expected to be negative at $0.17. Its revenue for the quarter ending March 31, 2023 is expected to fall 7.1% year over year to $1.23 billion. The stock has fallen 64% over the past year, closing the last trading session at $49.45.
IAC’s grim outlook is reflected in its POWR Ratings. The stock has an overall rating of D, which translates to a Sell in our proprietary rating system. It ranks 45th in the same industry. Grade D for Growth, Momentum and Stability.
We have also given IAC scores for Value, Emotion and Quality. Get all IAC rankings here.
Zhihu Inc. (ZH)
Headquartered in Beijing, People’s Republic of China, ZH is an online content community based in China. Its community allows people to find inspiration, find solutions, make decisions and have fun.
For the second fiscal quarter ended June 30, 2022, ZH’s total assets decreased 13.7% to RMB 8.33 billion ($1.17 billion) for the fiscal year ended December 31, 2021. , fell to RMB 19 billion ($1.01 billion).
The company’s operating loss increased 31.4% year-on-year to RMB 460.65 million ($65.04 million). Its adjusted net loss increased 121.5% year-on-year to RMB 443.78 million ($62.66 million). In addition, its net loss per share increased 45.9% to RMB 1.59 from the previous quarter.
For the quarter ending September 30, 2022, ZH’s loss per share is expected to reach $0.14, up 366.7% year over year. Its revenue for the same quarter is expected to be $122.92 million, down 4.7% year over year. Over the past year, the stock has fallen 85.3% to close the last trading session at $1.32.
ZH’s dark outlook is reflected in his POWR Ratings. The company has an overall rating of D, which equates to a Sell. It ranks 46th in the Internet industry. In addition, it is rated D for Growth, Momentum, Stability and Quality.
Click here See ZH’s other ratings for Value and Feelings.
ContextLogic Inc. (REQUEST)
WISH operates worldwide as a mobile e-commerce company. It runs Wish, an e-commerce platform that connects users with merchants. The company also provides market and logistics services to traders.
For the third quarter ended September 30, 2022, WISH’s revenue fell 66% year over year to $125 million. The company’s net loss increased by 93.8% compared to the previous year and reached 124 million dollars. In addition, its adjusted EBITDA loss increased 216.7% year-over-year to $95 million, and net loss per share increased 80% year-over-year to $0.18.
Analysts expect WISH’s EPS to remain negative for the quarter ending December 31, 2022. Its revenue for the quarter ending December 31, 2022 is expected to be $150.40 million, down 48% year over year. Over the past year, the stock has fallen 85.3% to close the last trading session at $0.75.
WISH’s grim outlook is reflected in its POWR Ratings. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system. It ranks 54th in the same industry. It has an F for stability and a D for growth and quality.
To view WISH’s other rankings for Value, Momentum and Sense, Click here.
SNAP stock was trading at $10.93 a share, down $0.14 (-1.26%) Thursday afternoon. Year-to-date, SNAP has declined -76.76% versus a -16.26% increase in the S&P 500 benchmark index over the same period.
About the Author: Malaika Alphonsus
Malaika’s passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, he intends to help investors make informed investment decisions. More…