iREIT Daily

The Social Media Company That “Snapped” the Markets

Brad Thomas

467 postsMay 25, 2022

It’s no secret that the social ad space that launched platforms like Twitter, Facebook, and Pinterest into billion-dollar territory is now having a tough go of it. Nearly every major name in the sector has reported sluggish first-quarter growth.

Nearly every major name in the sector missed the mark in terms of industry targets too. Though none have slid so severely as Snap Inc. (SNAP).

That’s the parent company of Snapchat, a messaging app that allows users to communicate via vanishing texts and images. Historically, this platform has performed well with Gen Z and millennial markets.

However, in a filing released Monday afternoon, Snap Inc. announced dire second-quarter projections from predictions made barely a month ago.

“There is a lot to deal with in the macro-environment today,” Chief Executive Office Evan Spiegel said at a JP Morgan Chase & Co. conference. Revenues have apparently declined “further and faster” than expected since Snap’s last discussion on the subject.

The company cited a range of circumstances including (of course) inflation, Apple’s privacy policy updates, and even the war in Ukraine.

That’s why the Nasdaq especially was down so badly yesterday despite its Monday rally. Though Snap only represents a fraction of social media, its adjustment sent shockwaves through the field.

Snap’s stock was down 41% by midday yesterday following Monday’s conference. Facebook’s parent Meta (FB) fell 9% on the news, and shares of Pinterest (PINS) shed 22%. Even Alphabet (GOOG) and Twitter (TWTR) took hits. And Amazon (AMZN) – which only recently started disclosing the breadth of its $33 billion online ad business – saw its shares dip by 4%.

Despite all of that, investors should really understand that comparing these companies against one another is complex. There are so many variables to consider such as demographics, geographics, and performance.

That remains true regardless of whether the markets are prone to instantaneous panic or not.

More Non-REIT News to Know About

Last week, we reported on the rather dismal state of retailers across the country as inflation interferes with discretionary spending.

No doubt, you recall Target (TGT) releasing its worst earnings report since the mid-eighties. That and Walmart (WMT) plunging a record 11% in a single trading day.

That sad saga continued yesterday when Best Buy (BBY) – America’s premier electronics retailer – announced falling sales and profits in its own Q1 earnings report. The slip in revenue was attributed to inflation, increased promotions, and higher shipping and logistics expenses.

From The Wall Street Journal:

“Best Buy reported earnings of $341 million for the quarter ended April 30 compared with $595 million a year earlier. The company’s revenue for the quarter fell roughly $1 billion from the previous year to $10.6 billion. Comparable sales dropped 8% compared with a rise of 37% in the quarter a year ago.”

The electronics giant now predicts a yearly revenue of $48.3 billion to $49.9 billion. That’s down from $49.3 billion to $50.8 billion.

Unlike Target and Walmart, Best Buy doesn’t deal in staples that can make up for dips in discretionary spending. So it’s the kind of retailer that could really suffer from here depending on how much consumers tighten their wallets.

The World According to REITs

The real estate investment trust (REIT) world involves some of the smartest, savviest investors and executives in the entire equities industry.

Even better, there isn’t much in the way of scandal in this circle. Its priorities consist of creating top-quality stable products, which usually entails a ton of transparency.

Overall, this is a “boring but beautiful” kind of category.

So seeing four executives from United Development Funding sentenced to federal prison last Friday on fraud charges? That’s not normal, to say the least.

You’re excused if you haven’t heard of this company before. It’s not exactly listed on a major exchange.

Still, I couldn’t help but notice the unnatural drama unfolding.

According to the attorney for the Northern District of Texas, these so-called leaders will receive 20 years in prison after they were found guilty on 10 counts of conspiracy and securities fraud.

ABC affiliate WFAA wrote:

“According to the USDOJ, the defendants moved money between their five funds – UDF I, II, III, IV, and V – when one of the funds didn’t get their loan back from a developer.
“The U.S. attorney said the SEC and the investors were not made aware of those transfers.
“‘According to evidence presented at trial, the defendants orchestrated a scheme to mislead investors and the SEC about their funds’ performance,’ [he added]…”

This news rocked the REIT realm when it first came to light last year. And it seems as though justice was finally levied upon the fraudsters last Friday.

To its credit, UDF is keeping a complete chronology of events in this investigation, which can be found on its website.

Hopefully this sentence will send a message to anyone else out there who’s considering these types of crimes.

Happy Investing

Brad Thomas

467 posts

View all my Posts

Brad Thomas is Senior Research Analyst at iREIT and CEO of Wide Moat Research LLC. With over 30 years of real estate experience, he is also long-time Editor of Forbes Real Estate Investor, a monthly subscription-based newsletter that dives deep into the vast world of profitable properties, and since 2021, he has served as an adjunct professor at New York University.

Thomas has also been featured on or in Forbes magazine, Kiplinger's, U.S. News and World Report, Money, NPR, Institutional Investor, GlobeStreet, CNN, Newsmax, and Fox. And he was the #1 contributing analyst on Seeking Alpha in 2014, 2015, 2016, 2017, 2018, 2019, 2020 and 2021 based on both page views and number of followers.

Thomas is the recently-published author of The Intelligent REIT Investor Guide (2021), co-author of The Intelligent REIT Investor (2016), and he wrote The Trump Factor: Unlocking The Secrets Behind The Trump Empire (2016) - all available on Amazon.

Thomas received a bachelor of science in business/economics from Presbyterian College and is married with five wonderful kids.

The Trade World Tightens to an Even More Frightening Degree

REIT Mutual Fund	Symbol
Alpine Realty Income and Growth Fund	AIGYX, AIAGX
American Century Real Estate Fund	REAIX, REACX, AREEX, AREWX, ARYCX, AREDX
Real Estate Securities Fund	MRESX
AR Capital Real Estate Income Fund	ARIAX, ARICX, ARIPX
AssetMark Real Estate Securities Fund	AFREX
Aston/Harrison Street Real Estate Fund	AARIX, ARFCX
Baron Real Estate Fund	BREIX, BREFX
BlackRock Real Estate Securities	BIREX, BAREX, BCREX
Brookfield U.S. Listed Real Estate Fund	BRUAX, BRUCX, BRUIX, BRUYX
CGM Realty Fund	CGMRX
West Loop Realty Fund	REIIX, REIAX, REICX
Cohen & Steers Institutional Realty Shares	CSRIX
Cohen & Steers Realty Income Fund	CSEIX, CSDIX, CSBIX, CSCIX
Cohen & Steers Realty Shares	CSRSX
Columbia Real Estate Equity Fund	CREAX, CREIX, CRRVX, CRERX, CREEX, CRRFX, CREWX, CRECX, CREBX
Compass EMP REC Enhanced Volatility Weighted Fund	CWRAX, CWRIX, CWRTX, CWRCX
Davis Real Estate Fund	RPFRX, DREYX, DRECX, DREBX
Delaware Real Estate Investment Trust Portfolio II	DPRTX, DPRBX
Delaware Real Estate Investment Trust Portfolio	DPREX, DPRSX, DPRRX, DPRCX
DFA Real Estate Securities Portfolio	DFREX
Dunham Real Estate Stock Fund	DAREX, DNREX, DCREX
DWS RREEF Real Estate Securities Fund	RRRRX, RRREX, RRRAX, RRRSX, RRRBX, RRRCX
DWS RREEF Real Estate Securities Income Fund	REFAX, REFCX, REFIX, REFSX
Eaton Vance Real Estate Fund	EAREX, EIREX
EII Realty Securities Fund	EIIRX
Fidelity Advisor Real Estate Fund	FHEIX, FHEAX, FHETX, FHECX, FHEBX
Fidelity Advisor Real Estate Income Fund	FRIRX, FRIQX, FRINX, FRIOX
Fidelity Real Estate Income Fund	FRIFX
Fidelity Real Estate Investment Portfolio	FRESX
Fidelity Spartan Real Estate Index Fund	FSRNX, FRXIX, FSRVX
Fidelity Series Real Estate Equity Fund	FREDX, FREFX
Fidelity Series Real Estate Income Fund	FSREX, FSRWX
Forward Real Estate Long/Short Fund	KSRYX, FRLSX, FFSRX, KSRAX, KSRCX, KSRBX
Forward Real Estate Fund	FPREX, FFREX, KREAX, KRECX
Forward Select Income Fund	KIFYX, FSIMX, FFSLX, KIFAX, KIFBX, KIFCX
Franklin Real Estate Securities Fund	FREEX, FRLAX, FRRSX, FSERX
GMO Real Estate Fund	GMORX
Goldman Sachs Real Estate Securities Fund	GREIX, GRETX, GREAX, GRESX, GRERX, GREBX, GRECX
Great-West Real Estate Fund	MXREX
Heitman REIT Fund	OARTX, OBRTX
ING Real Estate Fund	CRARX, IREWX, IDROX, CLARX, CRWRX, CRCRX, CRBCX
INVESCO Real Estate Fund	REINX, IARFX, IARIX, IARYX, IARAX, IARRX, IARCX, AARBX
Ivy Real Estate Securities Fund	IRSAX, IREIX, IRSYX, IRSRX, IREEX, IRSCX, IRSBX
John Hancock Real Estate Securities Fund	JIREX
Johnson Realty Fund	JRLTX
J.P.Morgan Realty Income Fund	URTLX, JRIRX, URTAX, URTBX, URTCX
J.P. Morgan Security Capital U.S. Core Real Estate Securities Fund	CEEAX, CEERX, CEEFX, CEESX, CEECX
J.P. Morgan U.S. Real Estate Fund	SUSIX
Lazard U.S. Realty Equity Portfolio	LREIX, LREOX
Lazard U.S. Realty Income Portfolio	LRIIX, LRIOX
Manning & Napier Real Estate Series	MNRIX, MNREX
Morgan Stanley Institutional U.S. Real Estate Portfolio	MSUSX, MUSDX, MSULX, MURSX
Natixis AEW Real Estate Fund	NRFAX, NRFYX, NRFBX, NRFCX, NRFNX
Neuberger Berman Real Estate Fund	NBRIX, NBRFX, NREAX, NRERX, NRECX, NRREX
Nuveen Real Estate Securities Fund	FREAX, FARCX, FRSSX, FREBX, FRLCX, FREGX
Oppenheimer Real Estate Fund	OREAX, OREIX, OREYX, ORENX, OREBX, ORECX
PHOCAS Real Estate Fund	PHREX
PIMCO RealEstateRealReturn Strategy Fund	PRRSX, PETPX, PETAX, PETDX, PETCX, PETBX
Pioneer Real Estate Shares	PWREX, PYREX, PCREX, PBREX
Principal Real Estate Securities Fund	PIREX, PIRPX, PREPX, PRETX, PREJX, PRRAX, PRERX, PRENX, PRAEX, PRCEX, PRLEX
ProFunds Real Estate UltraSector ProFund	REPIX
Prudential Select Real Estate Fund	SREAX
Prudential U.S. Real Estate Fund	PJEAX, PJEZX, PJECX, PJEBX
REMS Real Estate Income 50/50 Portfolio	RREIX
REMS Real Estate Value-Opportunity Fund	HLRRX, HLPPX
Rydex Real Estate Fund	RYREX, RYHRX, RYCRX
SA Real Estate Securities Fund	SAREX
SEI Institutional Mgd Real Estate Fund	SETAX, SEIRX
Spirit of America Real Estate Income & Growth Fund	SOAAX
SSgA Clarion Real Estate Fund	SSREX
Stratton Real Estate Fund	STMDX
T.Rowe Price Real Estate Fund	TRREX, PAREX
TIAA-CREF Real Estate Securities Fund	TIREX, TRRPX, TRRSX, TCREX
Vanguard REIT Index Fund	VGSNX, VGRSX, VGSLX, VGSIX
Virtus Real Estate Securities Fund	PHRAX, PHRIX, PHRCX, PHRBX

REIT ETF	Symbol
Flex Shares	ASET
Wisdom Tree Global Ex-US	DRW
S&P 500 Equal Weight	EWRE
iShares FTSE Industrial/Office	FNIO
MSCI Real Estate Index	FREL
S&P REIT Index	FRI
First Trust S&P REIT	FRI
iShares Real Estate 50	FTY
Flexshares Global	GQRE
iShares Cohen & Streers	ICF
iShares International Developed RE	IFGL
iShares US RE	IYR
Premium Yield Equity REIT	KBWY
ETRACS Monthly Pay 2x Leverage	MORL
Market Vector Mortgage	MORT
iShares Global REIT	REET
iShares FTSE Mortgage	REM
iShares Residential	REZ
IQ US Real Estate Small Cap	ROOF
iShares FTSE NAREIT Retail	RTL
DOW Jones Global RE	RWO
SPDR Dow Jones	RWR
Schwab US REIT	SCHH
Super Dividend REIT	SRET
ProShares Ultra RE	URE
Vanguard REIT	VNQ
Vanguard Global ex-US	VNQI
iShares International Developed	WPS
Wilshire US REIT	WREI
Pacer Benchmark Data & Infrastructure RE	SRVR
Pacer Benchmark Industrial RE	INDS
Pacer Benchmark Retail RE	RTL
Hoya Capital Housing	HOMZ
NetLease Corporate RE	NETL

REIT Name	Ticker	Annual Increases/yr
Federal Realty	FRT	51
Universal Health Realty	UHT	33
National Retail Properties	NNN	29
Realty Income	O	27
Tanger Outlets	SKT	26
Urstadt Biddle	UBA	25
Essex Property Trust	ESS	25
W.P.Carey	WPC	22
National Health Investors	NHI	17
Equity Lifestyle	ELS	15
Digital Realty	DLR	15

The Social Media Company That “Snapped” the Markets

Brad Thomas

467 postsMay 25, 2022

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467 postsMay 25, 2022

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