Pinterest ( NYSE: PINS ) and Snap ( NYSE: SNAP ) fell roughly 2% each in premarket trading on Friday as the broader tech sector took a breather following sharp gains this week and several investment firms noted some potential weakness going into fourth-quarter results.
Piper Sandler analyst Thomas Champion noted that Snap spend grew just 2% year-over-year and had a "limited" presence at CES. Conversely, spending on Amazon ( AMZN ) was seen as growing the fastest among the group.
Truist analyst Youssef Squali noted Snap ( SNAP ) is likely to see weakness in brand demand and thus have a "flattish" revenue and outlook.
"We expect Snap to deliver 1% [year-over-year] revenue growth and 15% Adj. EBITDA margin in 4Q with high-teens [daily active user] growth, offset by mid-teen [year-over-year] declines in monetization," Squali wrote in a note to clients. "The deceleration highlights the weakness in brand spend, which declined [year-over-year in the third-quarter]."
Squali added that in addition to advertising centric weakness, it is also being impacted by additional weakness in the global economy and competitors, including ByteDance's ( BDNCE ) TikTok and Meta's ( META ) Facebook and Instagram Reels, both of which are making "further gains."
Pinterest ( PINS ) on the other hand seems to be making improvements, with Piper Sandler's Champion calling out the company's new management team, led by CEO Bill Ready, and the company's partnership with Shopify ( SHOP ).
"Pinterest is our top idea into '23 driven by improving user trends, survey results & ad product improvement," Champion wrote in a note to clients.
Last month, Goldman Sachs listed Pinterest ( PINS ) as one of the companies best positioned to benefit from the blurring lines between traditional advertising and e-commerce .
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Pinterest, Snap slip as tech takes breather, analysts worry about Q4