In this article, we discuss the 10 best social commerce stocks to buy. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Social Commerce Stocks To Buy.
Social commerce refers to brands selling and advertising their products via social media platforms like Facebook, Instagram, Pinterest, and TikTok. Social media marketing has been trending and highly effective, and social commerce enables direct revenue generation as a result of social media marketing. In 2020, the market for social commerce was estimated at $559.7 billion, which is now projected to reach $2.9 trillion by 2026, growing at a CAGR of 30.8% over 2021 to 2026.
Following Facebook, Snapchat, YouTube, TikTok, and Instagram became more actively involved in social commerce, offering direct shopping features. According to a Shopify Inc. (NYSE:SHOP) representative, sales via social media platforms like Facebook and Instagram surpass several times the sales via direct websites of brands and merchants.
The leading markets for social commerce are the United States, China, Japan, Germany, and Europe. Social platforms like Instagram, Facebook, and Twitter act as discovery engines for brands, where influencers and celebrities are either using the products or endorsing them, which makes the masses aware of new offerings in the market.
Some of the most popular social commerce stocks to purchase include Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).
Our Methodology
We selected publicly listed social commerce companies that had positive analyst ratings, a solid financial position, and long-term growth catalysts.
Best Social Commerce Stocks To Buy
10. Tencent Holdings Limited (OTC:TCEHY)
Number of Hedge Fund Holders: N/A
Tencent Holdings Limited (OTC:TCEHY) is a Chinese multinational conglomerate that offers products and services in the technology and media sector. One of Tencent Holdings Limited (OTC:TCEHY)’s offerings is WeChat, a multipurpose application that allows instant messaging, digital payments, and social media networking. WeChat Business is a social commerce model developed by Tencent Holdings Limited (OTC:TCEHY), where B2C and B2B retailers advertise and sell their products. Similarly, for individual personalized selling to WeChat friends and subscribers, WeChat Salesperson mode is utilized.
On November 10, in the third quarter earnings report published by Tencent Holdings Limited (OTC:TCEHY), the company posted earnings per share of $0.51, missing estimates by $0.03. The $22.28 billion also missed estimates by $417.68 million.
Barclays analyst Jiong Shao initiated coverage of Tencent Holdings Limited (OTC:TCEHY) with an Overweight rating and a $84 price target on November 2. The analyst maintained a Positive view on the China Technology sector, stating that investors “can not ignore or not invest” in China since it is the second largest economy in the world, which is heavily supported by the Chinese government.
As of 2021, Tencent Holdings Limited (OTC:TCEHY)’s WeChat has 1.24 billion active users, making it one of the best social commerce stocks to buy.
9. Eventbrite, Inc. (NYSE:EB)
Number of Hedge Fund Holders: 17
An American event management and ticketing website, Eventbrite, Inc. (NYSE:EB) offers a digital platform to users that enables them to browse and promote local events. The Eventbrite, Inc. (NYSE:EB) platform assists with online payments for tickets, unless the events are free. This way, local artists, individual small-scale sellers, startups, and local brands can promote their exhibitions and get new customers.
Eventbrite, Inc. (NYSE:EB) announced its financial results for the third quarter on October 28, posting a loss per share of $0.17, missing estimates by $0.06. The revenue jumped 144.04% to $53.37 million, missing estimates by $533,000.
JPMorgan analyst Doug Anmuth lowered the price target on Eventbrite, Inc. (NYSE:EB) on December 15 to $17 from $21 and kept a Neutral rating on the shares. Heading into 2022, the analyst believes the internet group is in a stronger position than pre-pandemic amid increased digitization of the economy, and he prefers e-commerce and subscription based names over online advertising.
According to the Q3 records maintained by Insider Monkey, 17 hedge funds were long Eventbrite, Inc. (NYSE:EB), and Portsea Asset Management is the leading company stakeholder as of September 2021. The firm increased its stake in Eventbrite, Inc. (NYSE:EB) by 226% in the third quarter, with the total stake amounting to approximately $114 million.
Eventbrite, Inc. (NYSE:EB) is one of the best social commerce stocks to buy now, in addition to Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).
Here is what Artisan Partners has to say about Eventbrite, Inc. (NYSE:EB) in its Q2 2021 investor letter:
“Eventbrite is the largest software and ticketing platform helping event creators plan, promote and produce live events in small-and-mid markets. The company generates revenue by charging a per-ticket fee on paid tickets and has a strong foothold in the small-and-mid markets—nearly 20X the size of the next largest competitor. We believe Eventbrite is well-positioned to benefit from a sharp increase in demand for live events amid the broader re-opening of the US economy—a dynamic it has already witnessed in Australia with live events bouncing back to approximately 90% of 2019 levels. We expect this to be amplified by significant cost cuts made during the pandemic (>30% of 2019 revenue) remaining in place. Longer term, we believe Eventbrite should benefit from the secular trend toward consumer experiences, an industry growing over 8% per year prior to the pandemic.”
8. Groupon, Inc. (NASDAQ:GRPN)
Number of Hedge Fund Holders: 18
Groupon, Inc. (NASDAQ:GRPN) is one of the best social commerce platforms, offering discounted deals and coupons for consumer products including fashion goods, home goods, and accessories, in addition to discounted offers on vacation packages, travel deals, and ticketed events.
As of Q3 2021, 18 hedge funds tracked by Insider Monkey were bullish on Groupon, Inc. (NASDAQ:GRPN), down from 28 funds in the preceding quarter. The largest Groupon, Inc. (NASDAQ:GRPN) stakeholder is PAR Capital Management, increasing its stake in the company by 104% in the third quarter, holding 2.78 million shares worth $63.4 million.
On November 4, Groupon, Inc. (NASDAQ:GRPN) announced its third quarter results, posting an EPS of $0.38, beating estimates by $0.32. The $214.17 million revenue dropped 29.55% year-over-year, missing estimates by $2.19 million.
Ascendiant analyst Edward Woo on December 23 lowered the price target on Groupon, Inc. (NASDAQ:GRPN) to $35 from $40 and kept a Buy rating on the shares. According to the analyst, Groupon, Inc. (NASDAQ:GRPN) reported Q3 earnings upside but “mixed” new 2021 guidance. He believes that with a new CEO and outlook, Groupon, Inc. (NASDAQ:GRPN) will continue to improve amid vaccine rollouts and ongoing economic recovery. The analyst sees a favorable risk/reward at current share levels.
7. NetEase, Inc. (NASDAQ:NTES)
Number of Hedge Fund Holders: 32
NetEase, Inc. (NASDAQ:NTES), a Chinese tech company providing online services including content, community, communications, and commerce, is one of the best social commerce stocks to invest in. Via its online community, NetEase, Inc. (NASDAQ:NTES) advertises products on its ecommerce platforms. The company is also one of the biggest video game developers in the world.
NetEase, Inc. (NASDAQ:NTES) posted its Q3 results on November 16, announcing an EPS of $0.90, missing estimates by $0.06. The $3.47 billion revenue increased 22.40% from the prior-year quarter, exceeding estimates by $145.33 million.
On November 17, Citi analyst Alicia Yap lowered the price target on NetEase, Inc. (NASDAQ:NTES) to $136 from $142 and kept a Buy rating on the shares. According to the analyst, NetEase, Inc. (NASDAQ:NTES) reported “solid” Q3 results and will “remain as a defensive play in light of macro uncertainty impact to other internet verticals”.
A total of 32 hedge funds tracked by Insider Monkey reported owning stakes worth $2.32 billion in NetEase, Inc. (NASDAQ:NTES) in the third quarter. The largest NetEase, Inc. (NASDAQ:NTES) stakeholder is Orbis Investment Management, with 16.3 million shares worth $1.39 billion.
6. Pinterest, Inc. (NYSE:PINS)
Number of Hedge Fund Holders: 58
Pinterest, Inc. (NYSE:PINS) is a social media platform that allows users to share images, GIFs, and videos on its website. Users can save their ideas in the form of pinboards, and companies and individual sellers use Pinterest, Inc. (NYSE:PINS) for social commerce by hiring influencers who link products on their profiles for customers to purchase.
Reporting its Q3 results on November 4, Pinterest, Inc. (NYSE:PINS) posted earnings per share of $0.28, beating estimates by $0.05. Revenue over the period equaled $632.93 million, up 43% from the preceding year quarter, outperforming estimates by $1.83 million.
Citi analyst Jason Bazinet lowered the price target on Pinterest, Inc. (NYSE:PINS) to $42 from $48 and kept a Neutral rating on the shares on December 22. The analyst reduced the company’s multiple to better reflect its growth prospects relative to its social media peer group.
Pinterest, Inc. (NYSE:PINS) is a popular social commerce stock among hedge funds, as the third quarter database of Insider Monkey suggests that 58 funds were long Pinterest, Inc. (NYSE:PINS). Andreas Halvorsen’s Viking Global recently purchased stakes worth $368.4 million in Pinterest, Inc. (NYSE:PINS), making the stock a new addition in his Q3 portfolio.
Hedge funds are leaning towards Pinterest, Inc. (NYSE:PINS), in addition to Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).
Here is what Baron Opportunity Fund has to say about Pinterest, Inc. (NYSE:PINS) in its Q3 2021 investor letter:
“Visual search, discovery, and inspiration platform Pinterest, Inc. detracted from performance after the company provided disappointing monthly active user engagement metrics despite a strong quarter financially (revenue growth of 125% and almost 30% operating cash flow margins). As the economy reopened and COVID-19-related restrictions were lifted, user engagement for web users (who tend to be less engaged and generate less revenue) declined. At the same time, the company pivoted to a new video based engagement model, called Idea Pins. The transition to Idea Pins (not yet monetized) may cannibalize some monetized engagement in the near term, thus penalizing short-term revenues, but we remain encouraged by the long runway for growth as Pinterest improves its platform and expands internationally.”
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Disclosure: None. 10 Best Social Commerce Stocks To Buy is originally published on Insider Monkey.
