Social media stocks have been gaining a lot of attention lately. This is thanks to the world mostly communicating virtually these days amidst a pandemic. Before the age of social media, most people would get their news from the papers or scheduled TV broadcasts. Now, social media has become a prime medium for the real-time stream of information and news worldwide. Whether it is the general public, businesses, or even the government, almost everyone has a social media presence. Naturally, companies behind the top social media stocks have and continue to find ways to monetize that experience. Because of this, investors have been watching some of them closely.
It is also important to note that social media companies are a part of the tech industry as well. Tech juggernauts like Google (NASDAQ: GOOGL) and Amazon (NASDAQ: AMZN) do have social media platforms. Both companies own streaming platforms in YouTube and Twitch respectively. How they monetize these entertainment platforms is mostly through ad revenue. With vaccination efforts underway and the possibility of businesses reopening, we could see advertisement spending rise to pre-pandemic levels. In that case, you might want to get an idea of which social media stocks are ready to benefit accordingly. Well, here are four to check out amidst the current earnings season.
- Snap Inc. (NYSE: SNAP)
- Twitter Inc. (NYSE: TWTR)
- Pinterest Inc. (NYSE: PINS)
- Facebook Inc. (NASDAQ: FB)
Snap Inc.
Snap is a camera and social media company that many in the younger generation today are familiar with. To point out, its flagship social media platform, Snapchat is a service with almost 250 million daily active users. Its camera-focus platform integrates sophisticated augmented reality (AR) technology which has kept many entertained throughout the pandemic. Given that SNAP stock has surged by over 530% since the March lows, it seems that investors have been keen on the company.
Earlier this week, the company was reported to have acquired British research lab Ariel AI. Ariel’s AR technology has the capabilities to insert a 3D model of a human into a smartphone camera’s view in real-time. According to CNBC, the purchase price was somewhere in the low seven-figure range. Ariel’s engineers would improve the AR experiences on Snapchat’s camera by making it “smarter”. With Snap bolstering in its AR technology, users could be in for more exciting updates ahead. In turn, this could mean more active users, and subsequently, more ad revenue. Could this development mean big gains for SNAP stock? It may be too soon to say.
In terms of financials, Snap reported solid third-quarter figures back in October. Its revenue was up by 52% year-over-year and it ended the quarter with $824 million in cash on hand. Snap is slated to release its recent quarter fiscal next Thursday. Do you think now is a good time to watch SNAP stock?
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Twitter Inc.
Another top social media stock in focus now would be Twitter. The microblogging social media platform is used by over 187 million people daily. The company has been in the spotlight due to its handling of former President Donald Trump’s Twitter account. However, as the dust settled on that heated story, TWTR stock is looking at gains of over 7% since Twitter announced some exciting news on Tuesday.
On the company blog, Twitter revealed that it had acquired email newsletter startup, Revue. Because of this, all users on the platform can now access Revue’s features for free. This is great for both the company and users looking to make money from their followers. Twitter is essentially lowering the paid newsletter fees on Revue’s platform to help writers retain higher revenue from subscriptions. By and large, this would help with attracting more content creators to the platform along with their followings. Should things go as planned, the company would then see more monetizable content on its platform as well.
In its recent quarter fiscal posted in October, Twitter brought in total revenue of $936 million. The company also ended the quarter with a massive $2.2 billion in cash on hand. With Twitter scheduled to release its fourth-quarter earnings on February 9, will you be adding TWTR stock to your watchlist?
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Pinterest Inc.
Next, we will be looking at image sharing platform, Pinterest. Over 442 million active users have flocked to its social media platform for its unique “Pinboards” feature. Simply put, users can discover and compile information on the internet in the form of images, animated GIFs, and videos, on these pinboards. Seeing as most people are still stuck at home amidst the pandemic, having a place to plan for the future would be useful. Investors appear to feel that same way as PINS stock is up by over 170% in the past six months. Just yesterday, it rose by over 5% as it received an upgrade from Wall Street.
Wall Street analyst Brian Fitzgerald reiterated an overweight rating and bumped up PINS stock’s price target from $75 to $85. Understandably, investors would be keen to jump on PINS stock after such a rosy update. Should Pinterest improve in terms of monetization, the company could be on track to meet these targets. For reference, its average revenue per user (ARPU) was $1.03 worldwide based on its recent quarter fiscal. In the U.S., that figure was more than three times that amount at $3.85. Theoretically speaking, the company has ample space to grow on the international front. Do you think investors should be watching PINS stock ahead of the company’s fourth-quarter earnings call next week?
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Facebook Inc.
Last but definitely not least is Facebook. The social media goliath is no doubt, a household name at this point. This is clear as its platform continues to help billions of people worldwide stay connected with friends and family. As one of the leading social media players on the market, FB stock has been in the limelight over the past year. It has surged by over 75% since the stock market crashed in March. Earlier this week, the company announced its fourth-quarter financials and wowed investors, to say the least.
On Wednesday, the company reported robust results across the board. Facebook raked up a total revenue of $28 billion for the quarter. To investors’ delights, it saw a 52% year-over-year leap in earnings per share as well. Another key metric to note when it comes to social media companies would be daily active users (DAUs). Well, Facebook saw an average of 1.84 billion DAUs in December. Moving forward, the company cited growing e-commerce trends and shifting consumer demands as key drivers for its current momentum. Understandably, these provided a tailwind for Facebook’s advertising business and marketplace. As these factors remain present along with the pandemic, Facebook could be able to maintain its current momentum. Could FB stock flourish because of this? You tell me.
