In this article, we take a look at the 12 Best Social Media Stocks To Buy Now. If you are in a hurry, you can click to skip ahead to the 5 Best Social Media Stocks To Buy Now.
Social media is a computer-based technology that facilitates the sharing of ideas, thoughts, and information through the building of virtual networks and communities. By design, social media is internet-based and gives users quick electronic communication of content.
The word social media is not foreign to us and it has been around for decades. The first social media platform was Six Degrees which was created in 1997 followed by a more popular social media site, Friendster which was launched around 2002. Social media allowed people to connect via the internet and today the industry continues to thrive (please also see the 14 Best Internet of Things Stocks to Buy Now).
In a study conducted by Statista, 70% of the U.S. population has at least one social media profile. While China has the biggest social media market worldwide with 822 million users in 2019. By 2021, the number of worldwide social media users is expected to reach about 3.1 billion people.
The COVID-19 pandemic has taken a toll on many industries but social media was not one of them. Enforced lockdowns, and people’s inclination to stay indoors to protect themselves boosted the industry in 2020. As social distancing was in place, social media kept us connected to each other with maximum social distancing. In a survey conducted by Digital Commerce 360, the majority of respondents agreed that their social media consumption (72%) and posting (43%) have increased during the pandemic. According to Global WebIndex, users are spending an average of 2 hours and 24 minutes per day multi networking across an average of 8 social networks and messaging apps.
Not only did it help us stay connected during the pandemic, but it also helped businesses stay alive by the use of e-commerce (see 15 Best E-Commerce Stocks to Buy Now), sales channels, and online advertising in social media. According to Lyfe Marketing, 97% of marketers are using social media to reach their audiences. And according to HubSpot, social media has a 100% higher lead-to-close rate than outbound marketing tactics.
During the recent elections, Social media gave voice to the voters and helped predict the outcome. According to insights from Study.com, 72% of US Citizens of voting age actively use some form of social media. Data from Hootsuite showed that there were 6.6 million total mentions of Trump and Biden, with Biden owning 72% of those mentions during the debate between those two candidates.
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In order to identify the 12 Best Social Media Stocks To Buy Now, we started with the 38 holdings in the Global X Social Media ETF (SOCL) as of December 31, 2020, and we were able to narrow down our list to 12 stocks by using our hedge fund sentiment scores.
Our in-house analysis shows that we can use the sentiment information gathered from the hedge fund filings to classify in advance a select group of stocks that can beat the S&P 500 index by double digits annually on average. For instance, the portfolio of our monthly newsletter’s stock picks has beaten the market by over 88 percentage points since March 2017 (see the details here). Some of the portfolio holdings of our monthly newsletter have been shared online too. In October, we shared this real estate stock and since then, it’s been up nearly 50 percent.
Based on our hedge fund sentiment data, we present to you, the 12 Best Social Media Stocks To Buy Now, among the 800+ hedge funds tracked by Insider Monkey:
12. Angi Homeservices, Inc. (NASDAQ:ANGI)
No of HFs: 42
Total Value of HF Holdings: $348 Million
We start the list of best social media stocks to buy now with Angi Homeservices, Inc. The company is home to the world’s largest digital marketplace for home services. On November 11, 2020, the president and COO of ANGI sold 371,738 shares of ANGI at an average price of $10.42 a share. The total sale was $3.9 million.
The top hedge fund holder of this stock is Jim Simons’ Renaissance Technologies which had $46 million invested in the stock at the end of September. We published an article about ANGI recently and said the following:
ANGI Homeservices Inc (NASDAQ:ANGI) is the largest home-improvement site in the digital space today. Selling at more than 300 times earnings, it is also far from a cheap stock. But it is also undergoing a transformation that, if successful, could not only make it a much more profitable company, but could also significantly increase its market share.
….Barry Diller’s holding company, IAC, holds an 85% stake in ANGI Homeservices. So, purchasing IAC may be more attractive for investors interested in tapping into ANGI’s growth opportunity who might balk at the high valuation. IAC’s current equity value is ~$10.4 billion. The value of IAC’s stake in ANGI Homeservices and the cash on its balance sheet is ~$9.2 billion. Investors who purchase shares in IAC also get to invest alongside Barry Diller in other early-stage companies, including digital media company Dotdash and Software-as-a-Service (or SaaS) video tools provider Vimeo, at an implied valuation of $1.2 billion, which I believe could easily be a relative bargain compared to their long-term value.
11. Baidu, Inc. (NASDAQ:BIDU)
No of HFs: 43
Total Value of HF Holdings: $2.80 Billion
BIDU is a Chinese multinational company. The company was mentioned as one of the 10 Best Chinese Stocks to Buy Now. They are known for connecting users to relevant information online, including web pages, news, images and documents through the use of mobile devices, PCs, and other smart devices.
Check out an article where we shared GDS Investments’ views about the stock:
“With China on the mind, we turn to Chinese internet search firm Baidu, Inc. (NASDAQ: BIDU). At a price of approximately $115.00 per share, the company’s stock is at a 6-year low after it reported its first ever publicly-traded quarterly loss.
Interestingly, that loss is largely attributable to one factor: the company’s higher-than-normal operating costs during the first quarter when Baidu served as the main sponsor of the 2019 CCTV Chinese New Year Gala. In terms of television viewership, that gala is something like producing ten Super Bowl-level events all at one time. In a win for the company, though, and despite the high costs it incurred, Baidu doubled its daily active users. That, of course, should lead to better top-line results in the future.
To the extent other factors influenced the unexpected weakness in Baidu’s bottom-line results we can point to the company’s 58% ownership in iQIYI, Inc. (NASDAQ: IQ), a Netflix-like on-demand video streaming service and 19% ownership of Ctrip (NASDAQ: CTRIP). Collectively these two holdings comprise roughly 30% of BIDU’s current market capitalization. With clear leadership in search, video streaming, AI and autonomous vehicle technology, Baidu is one the best and cheapest ways to gain access to these emerging growth technologies. Though the YTD performance of this company is disappointing, we remain optimistic about its long-term prospects.”
10. Spotify Technology, Inc. (NYSE:SPOT)
No of HFs: 44
Total Value of HF Holdings: $1.64 Billion
SPOT ranks 10th in our list of the best social media stocks to buy now. The Swedish audio streaming and media service provider has only publicly traded on the New York Stock Exchange since 2018 but has been around since 2006. The company provides digital music-streaming services and at the same time provides a platform for artists to personalize and create their profiles for public listening.
Baron Partners Fund mentioned in an article that SPOT has the potential to grow from 138 million playing subscribers to over 250 million in four years.
“Spotify Technology S.A. is a leading global digital music service offering on-demand audio streaming through paid premium subscriptions as well as a free ad-supported model. Shares were down as second quarter revenues were negatively impacted by a pandemic-related pullback in advertising spend. We continue to view Spotify as a long-term winner in music streaming. It has potential to grow from 138 million paying subscribers to over 250 million in four years. This growth will be driven by its scalable core music product and expanding library of spoken-word content.”
Forager Funds also mentioned in an article that the stock is gaining popularity and even more popular than Kim Kardashian.
“The Spotify (NYSE:SPOT) share price has increased more than 60% since mid-May, adding more than US$15bn to its market capitalisation. The rally started after the company announced a multi-year exclusive licencing deal with Joe Rogan, one of the most popular podcast interviewers in the world. Since then, Spotify has announced additional exclusive contracts with Kim Kardashian and Barack Obama.
While that may seem like a lot of value to attribute to a couple of celebrity podcasts, it’s further evidence that Spotify is building a moat around its business. Prior to these investments, Spotify announced that 19% of users listened to podcasts in the first quarter of 2020, up from just 5% of users two quarters prior. That’s an additional 20 million people that started listening to podcasts on Spotify in a six month period.
The stock is becoming more popular than Kim Kardashian herself.”
9. NetEase, Inc. (NASDAQ:NTES)
No of HFs: 45
Total Value of HF Holdings: $3.66 Billions
NTES ranks 9th in our list of the 12 best social media stocks to invest in. The Chinese Internet Technology Company, NTES has provided its users with online services centered on content, community, communications, and commerce. Recently, the company announced that a concert by TFBOYS held on its platform has broken the Guinness World Records for the most viewed paid concert. The concert was viewed by over 786,000 fans, setting the world record title for “the most live viewers for a pay per view music concert on a bespoke platform.
The stock was mentioned as one of the 10 Best Cheap Stocks to Buy Now According to Ray Dalio and as one of the Top 10 Video Gaming Stocks to Buy Now.
8. Zynga, Inc. (NASDAQ:ZNGA)
No of HFs: 48
Total Value of HF Holdings: $959 Million
ZNGA ranks 8th in our list of the best social media stocks to buy now. ZNGA has been developing online games and mobile games since April 2007. The company aims to connect the world through games. By offering games for free primarily through the app stores of Apple and Google, as well as social networking sites such as Facebook and Snapchat.
Recently, ZNGA announced the pricing of $762 million aggregate principal amount of 0% convertible senior notes due 2026.
7. Snap, Inc. (NYSE:SNAP)
No of HFs: 51
Total Value of HF Holdings: $1.16 Billion
SNAP reinvented the way we look at camera and camera filters today by reinventing the camera itself. They provide a platform to take photos and videos, attach messages and send them to different users. The company was ranked #7 in the 2019 Valut Rankings for best internet and social media companies. SNAP was mentioned in the 5 Biggest Gainers and Losers: December 29, 2020:
“Snap Inc. (NYSE:SNAP) stock jumped more than 10 percent in the early trading Tuesday after receiving a price target hike from Goldman Sachs. SNAP shares are currently trading around their 52-week high. Goldman increased its price target for SNAP stock from $47 per share to $70 per share, saying the Santa Monica, California-based social media company will likely achieve faster revenue growth in the coming quarters. The research firm has a “Buy” rating for the stock.”
Recently, the company announced that they are in talks with Bharat-focused social media firm, ShareChat for a minority stake. If the deal pushes through, it would be the first investment from Snap’s parent company into an Indian startup.
6. Match Group, Inc. (NASDAQ:MTCH)
No of HFs: 61
Total Value of HF Holdings: $2.84 Billion
MTCH ranks 6th in our list of the best social media stocks to buy now. If you’re looking for a major online dating service, Match Group, Inc. owns and operates about 45 global dating companies. One of the most popular dating site owned by Match Group is Tinder with an estimated user number of 50 million people worldwide.
MTCH partnered with RAINN, the nation’s largest anti-sexual violence organization to work together in improving the current safety systems. The expertise and recommendations of RAINN will accelerate Match Group’s work to a safer online dating service. Tracey Breeden, Head of Safety and Social Advocacy for Match Group mentioned that they are committed to creating actionable solutions for safety challenges,
“Every person deserves safe and respectful experiences, and we want to do our part to create safer communities on our platforms and beyond. By working together with courageous, thought-leading organizations like RAINN, we will up level safety processes and strengthen our responses for survivors of sexual assault. Safety challenges touch every corner of society. We are committed to creating actionable solutions by working collaboratively with experts to innovate on meaningful, industry-led safety approaches.”
Is MTCH a compelling stock? Check out this article where we mentioned Blue Hawk Investment Group’s comments on the stock.
“Match Group (MTCH) – As we mentioned last quarter, we felt that restrictions on large social gatherings would be a tailwind for online dating and MTCH, as singles’ demand to date would not be diminished in a socially distant world. The company reported a strong Q1’20, with revenue growing 19% y/y ex FX, driven by Tinder Direct’s 31% y/y revenue growth with average subscribers growing 28%. In addition to the strong quarterly growth numbers, the company also noted accelerating engagement levels on the platform and record numbers of messaging and video dates, a positive sign for overall ecosystem health.
In addition, the company completed the spin-off from its parent company IAC on the last day of the quarter, becoming a fully independent company and greatly increasing the liquidity of its equity. As we saw from our days following and owning Blue Buffalo, these events can be counterintuitive for premier, durable growth stories. One would expect the increase in liquidity (supply) to put pressure on the share price, however, the opposite can occur in these unique situations – due to the over-concentration of assets in the growth fund space. The increased liquidity from the spin in this particular example allows the big funds to build a position, which was not previously possible, so supply of available stocks increases but demand increases to a larger extent and drives up the price, a nice nearterm tailwind for the newly-independent company.”
Click to continue reading and see the 5 Best Social Media Stocks To Buy Now.
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Disclosure: None. 12 Best Social Media Stocks To Buy Now is originally published at Insider Monkey.
