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Why social media stocks are getting murdered this week

May 1, 2015, 5:09 PM UTC
A trader raises his hand just before the Twitter Inc. IPO begins on the floor of the New York Stock Exchange in New York
A trader raises his hand just before the Twitter Inc. IPO begins on the floor of the New York Stock Exchange in New York, November 7, 2013. Twitter Inc shares soared as much as 92 percent on their first day of trading on the New York Stock Exchange, an extraordinary debut that drove the seven-year-old company's value to more than $25 billion and evoked comparisons to the dot-com bubble of the late 1990s. REUTERS/Lucas Jackson (UNITED STATES - Tags: BUSINESS SCIENCE TECHNOLOGY TPX IMAGES OF THE DAY) - RTX154JO
Photograph by Lucas Jackson — Reuters

Social media may be what all the kids are up to, but it wasn’t what investors liked this week.

Three social media companies — Twitter, Yelp, and Linkedin — all reported underwhelming results that led to their stocks being clobbered this week, reports the New York Times.

Linkedin shares (LNKD) fell 25%, Twitter 25% and Yelp (YELP) 23%.

From the Times:

The performances illustrate the way investors are questioning whether social media companies can keep their growth rates vigorous enough to justify their valuations. The stocks of all three companies had traded at relatively high levels, reflecting Wall Street’s giddy projections. Yet all three shattered that perception in their own way. And while many of these stocks are often volatile, with investors on edge about the weak economy, interest rates and other issues, shareholders increasingly have little tolerance for the slightest misstep.

“Based on where some of these stocks were trading, expectations were already very high and were priced for relative perfection,” said Colin Sebastian, a senior analyst for Robert W. Baird & Company. “The reaction when companies don’t achieve great results can be fairly severe.”

The Times notes that the difficulty these companies face in the public arena could lead other tech startups to avoid heading out on the IPO trail, opting instead to stay private.

For more about Twitter, watch this Fortune video: