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TikTok, YouTube see rise in usage during Q2, but Instagram, Facebook see declines: MS - Seeking Alpha

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Investment firm Morgan Stanley noted that time spent on ByteDance’s (BDNCE) TikTok and Google’s (NASDAQ:GOOG) (GOOGL) YouTube continued to rise in the second-quarter, but Meta Platforms’ (NASDAQ:META) Facebook and Instagram saw declines, citing recent third-party data.

A group of analysts, led by Brian Nowak, noted that YouTube (GOOG) (GOOGL) saw engagement growth for the third-straight quarter and 20% above 2019 levels, as total time spent grew 3% year-over-year.

The analysts said the trends were “encouraging,” noting YouTube’s large base as 74M users already spent 72 minutes a day on the platform and there continues to be competition from ByteDance’s (BDNCE) TikTok.

ByteDance’s (BDNCE) TikTok saw a 14% rise year-over-year in total time spent during the period, as U.S. daily users grew roughly 11% year-over-year to 95M and average time spent increased 3% to roughly 91 minutes per day, though that is a “significant deceleration” from the roughly 45% year-over-year growth seen in the past two years.

“This speaks to how the second derivative engagement risk from TikTok to other platforms may be set to start falling,” the analysts wrote, adding that from a monetization perspective, the focus is on TikTok’s ability to “scale ad products, build programmatic tools and ultimately drive ROI for advertisers.”

In total, time spent on social media increased 4% year-over-year in the second-quarter to 2.5T minutes on the top six platforms.

Conversely, Meta Platforms (META) saw a 1% decline year-over-year, with the analysts noting the risk has been raised of Reels cannibalizing other products.

The analysts noted that total time spent on Instagram and Facebook is 12% and 16% above second-quarter 2019 levels, but year-over-year time growth for Instagram “decelerated significantly” to just 2% year-over-year, down from roughly 20% in the first quarter.

Facebook’s blue app continues to see a decline in total time spent, falling 3% year-over-year in the second-quarter, compared to a 5% year-over-year drop in the first quarter.

“In our view, these slowing time spent trends combined with META’s rising and successful efforts to emphasize Reels speak to a rising tactical risk of Reels engagement being more cannibalistic to near-term time and revenue (given Reels still monetizes at significantly lower rates than core Feed/Stories offerings),” the analysts wrote.

Other social networks also did not fare well in the second-quarter, as Snap’s (NYSE:SNAP) Snapchat saw a 1% decline year-over-year in time spent in the second quarter, though that was better than the 3% to 13% year-over-year declines the firm has seen in the past year.

Pinterest (PINS) saw a 9% decline year-over-year in total time spent during the second-quarter, which Morgan Stanley says was the “smallest amount of minutes since 2017.”

“Continued engagement challenges contributed to our downgrade and we remain cautious as PINS focuses on shifting toward lower monetizing short form video offerings on the platform,” the firm said.

Earlier this week, it was reported that Alphabet (GOOG) (GOOGL) intends to slower its hiring in the second half of 2022, noting it is not immune to the overall economic headwinds.

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