The next couple quarterly results for social media stocks should be quite impressive considering the fact that people have been stuck inside since March. After all, you can only play video games and watch TV for so long until social media beckons.
Social media membership is up across the board, fortifying an already-strong user base and setting the stage for uber-profitable quarters to come. Instead of spending for costly ads on TV, plenty of advertisers have shifted their attention to social media in hopes of gaining favor with free-spending millennials and the generation Z age cohort.
Facebook (FB), Twitter (TWTR), Snap (SNAP) and Weibo (WB) have the potential to skyrocket prior to and after their upcoming quarterly results are released.
Facebook (FB)
You have the opportunity to own a social media giant with its own marketplace and virtual reality technology. FB seems to do it all these days. In fact, the social media giant might even launch its own cryptocurrency, dubbed “Libra”, later this year.
FB’s POWR Ratings could not be better: As across the board with an industry rank of #4 out of 52 Internet stocks. FB price returns are in the green in the past months, year and half-decade, highlighted by a three-month return of 40% and a five-year return of 191.67%.
FB daily active users are up 11% on a year-over-year basis. It is particularly interesting to note nearly 100% of FB advertising in the most recent quarter stemmed from advertising, meaning the company is not capitalizing on the sale of user data to the extent of TWTR.
If FB’s Libra cryptocurrency, virtual reality gamble or online marketplace succeed, the stock should move toward the analysts’ high target of $275 before year’s end.
Twitter (TWTR)
Those who read the news online or peruse internet message boards have likely stumbled on their fair share of embedded TWTR videos in recent weeks and months. Many of these videos played directly from online forums and websites in months prior. However, recent alterations to the platform have disallowed the playing of embedded videos from other websites, forcing web surfers to visit TWTR to watch the content. This is an important change as TWTR has been ground zero for footage of the worldwide anti-racism protests.
The only weakness of TWTR is the platform does not feature nearly as many ads as it should. From an investor’s perspective, it would be prudent to ramp up advertising across the entirety of the platform, possibly encouraging corporations to exclusively sponsor celebrity tweets. As an example, it would make sense for Sprite to be the official sponsor of Lebron James’ tweets.
When in doubt, invest in what the millennials and generation Z favor as these age cohorts are the consumers who will drive the economy in the future. These two age cohorts are infatuated with TWTR.
If TWTR can capitalize on its advertising opportunities, it should return to its 52-week high of $45.86 by year’s end. Add in TWTR’s B Trade Grade in the POWR Ratings combined with its A Industry Rank grade and it is easy to see why the analysts have set a high forecast of $40 for the stock.
Snap (SNAP)
A social media company that experiences a reduction in growth in the months when the majority of the world was locked down should scare investors. However, when that company is named Snap, there is no reason for consternation. The SNAP audience is primarily comprised of younger individuals, most of whom had already joined the social media platform prior to the pandemic.
SNAP’s most successful offering, Snapchat, empowers users to communicate through abbreviated videos and pictures known as “Snaps.” Snaps are popular in the United States. SNAP momentum is also building in other regions of the world including the coveted market in India.
SNAP aces the POWR Ratings with As in every POWR Component, an industry rank of 7 out of 52 Internet stocks and an incredible three-month price return of 95.10%. SNAP has an anticipated earnings growth rate of nearly 44% for the year, making it a true market darling.
Weibo (WB)
Self-expression and individuality have never been more important. The rise of the internet has empowered people to develop nuanced interests, establish personal identity and create a unique online persona. WB facilitates this self-expression.
WB makes money through advertising and overly-vague “other services.” The company develops mobile apps yet marketing is its bread and butter. There is the potential for WB to be delisted along with other Chinese stocks if President Trump is re-elected yet it appears as though Trump’s threat is an empty one.
WB marketing revenue is up 25% on a year-over-year basis, eclipsing the $400 million mark. If Trump’s rhetoric on China stocks continues to cool, WB just might reach the analysts’ expected price point of $39.50 by the end of the third quarter.
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About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More…
