Wall Street skeptical about social media stocks

facebookAfter an effusive 2013, social media investors are getting gun-shy in 2014, judging by substantial declines in the stock prices of big social media companies including Twitter, Facebook, and LinkedIn. While each company’s circumstances are different, broadly speaking investor skepticism appears to be fueled by interconnect concerns including slowing growth in user numbers, stagnant engagement figures, and doubt about long-term profitability in the case of Twitter and LinkedIn.

At the time of writing Twitter was trading at $39.00, down 17% from $46.99 on April 22nd and 47% from twitter$73.71 on December 26, 2013. The most recent declines followed a first-quarter earnings report that showed total sales more than doubling to $250 million, beating most analyst estimates, with mobile advertising contributing 80% of total ad sales, which in any other industry would be cause for celebrating in the streets — but not social media.

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