When past becomes prologue.
Below are two excerpts from two different articles I wrote back in 2018 that are as relevant and prescient today as I wrote back then. The first deals with the topic of when it comes to advertisers. The second as it pertains to stock valuations and their impact on the broader zeitgeist.
First: Advertisers and their sudden calls for leaving social March, 2018. To wit:
Because if it was working as sold? Advertisers wouldn’t be so forth coming, stating they’re now pulling ads away. i.e., If those ad dollars were producing results in-line with their expenditure? Businesses would be very hush-hush, in a much more wait and see mode of operation on what to do next, if anything. That’s a very big tell-tale sign, or clue that should not be overlooked, in my humble opinion.
The only reason a business (generalization, of course) cancels any type of advertising that is working, with great fan-fare, or decry of public outrage, is that in doing so, it is seen as a greater sales tool – than keeping the original ad budget expense.
Or said differently: This is the perfect excuse to soothe jittery boardrooms or executives to no longer spend precious ad dollars on social, and possibly try other avenues or venues. The reasoning is simple:
If there are going to be less content providers via FB’s own censorship, along with a full-blown user revolt? Then, much like IBM found itself in-the-blink-of-a-cursor back in the final go-go days of the dot-com era. People began getting fired for not seeking IBM alternatives rather than just going with the assumed “competitive brand leader.”
FB is in this double whammy situation in my view. For like I’ve also argued: The moment Wall Street’s current ads-for-eyeballs model or projections are seen to be in jeopardy against the backdrop of a stock, that’s for all intents and purposes, “priced for perfection?”
Just – like – AOL.“Facebook’s Latest Excuse Is Just The Excuse Advertisers Have Been Waiting For To Leave”
Here’s the other from September, 2018 in respect to the implications to “markets” in general, again, to wit:
Could we see a replay of 2008, but instead of Bear Stearns then Lehman type of events, we something similar in-kind with FB, then Twitter™ or, vice versa? What happens, for whatever the reason, investors (or algos) begin dumping, reminiscent of the dot-com era?
What happens then, when the central banks of other countries find their once profitable investments which were perceived as once “no-brainers” to sure-up their own national finances begin dumping? Hint: here’s just one for your consideration aka Swiss National Bank.
Social media along with search (e.g., Google™ the “G” in the “FAANG” family) has been the benefactor of another great idiom that was once unassailable to the BTFD crowd along with their “it’s different this time” brethren-in-arms. e.g., The “ads for eyeballs” metric.
But that metric is now in a serious, as well as precarious moment of fate and fortune or, infamy for possibly draining then dwindling many a fortune once made by it.
Again, the reasoning is both simple and should be self-evident: With social media platforms and others uniformly purging content providers, inevitably leading one to reasonably conclude that the followers of those purged providers would in-turn purge their social accounts. Where does the value for growth in these companies come from to sustain already exorbitant perceived levels? Let alone – for ever higher.
Insiders such as “Zuck and Crew” themselves have already purged $Billions of their own shares. And insiders across the entire “market” have used this incessant “buy back” via company funded debt to sell their own shares again – at record levels!
Should a sudden collapse in the shares of Facebook or Twitter happen in an out-of-the-blue type moment, similar in type as we in any of the last episodic scenarios witnessed in ’08 or the dot-com era, what does a central bank such as the Federal Reserve or others do?
It may not be the banks that are the initial impetus for a scare – it may come from any of these high flyers of the FAANG family.
Does a sudden run have a knock-on effect for the Swiss and its currency? Does that begin a rout elsewhere? And who steps in this time? The Fed? The EU? Can anyone? And where do you apply the “tourniquets?”
The Fed. may have authority to sure -up the banks in a crisis, but will it need to sure-up corporates in a rout? And how will it do that without backlash? Does it even know how? And more importantly would it work at all?“”Will Facebook and Twitter Signal The Next Bear Stearns, Lehman Moment?”
The reason for the above is this…
At the time of those writings the entirety of the mainstream business/financial media was certain nothing could truly hurt the valuations of not just these two tech giants – but social itself. Then, the entire complex collapsed (along with everything else) and was only saved via the Federal Reserve and other central banks for which the Swiss National Bank itself, for all intents and purposes – doubled down, printed more, and bought more.
For those that don’t remember: Facebook (from 218 to 123) and Twitter (from 47 to 20) valuations were all but cut in half.
What happens if it doesn’t work out the same way, this time?
© 2020 Mark St.Cyr