In this article, we discuss the 5 best social commerce stocks to buy. If you want our detailed analysis of these stocks, go directly to the 10 Best Social Commerce Stocks To Buy.
5. Snap Inc. (NYSE:SNAP)
Number of Hedge Fund Holders: 78
Snap Inc. (NYSE:SNAP) is a social media company that owns and operates platforms like Snapchat, Spectacles, and Bitmoji. Snap Inc. (NYSE:SNAP)’s main offering is Snapchat, which is a photo sharing and instant messaging platform. Following Facebook’s huge social shopping success, Snap Inc. (NYSE:SNAP) invested heavily in Snapchat’s social commerce features.
Snapchat leverages augmented reality technology, which allows users to virtually try on accessories and clothing, thus minimizing returns on online shopping orders. The users can also take a picture of a product with the Snapchat app, and find similar products to purchase online. Many brands also advertise their products via Snapchat influencers, who link their stories to the product website for purchasing.
Loop Capital analyst Alan Gould on December 21 lowered the price target on Snap Inc. (NYSE:SNAP) to $68 from $79 but kept a Buy rating on the shares.
Of the 78 hedge funds that were bullish on Snap Inc. (NYSE:SNAP) in the third quarter, Stephen Mandel’s Lone Pine Capital is the biggest company stakeholder, holding a $1.67 billion stake.
Here is what Jefferies Group has to say about Snap Inc. (NYSE:SNAP) in its Q3 2021 investor letter:
“We believe SNAP may be one of the best positioned virtual platforms in the development of the Metaverse. In order to better understand SNAP’s leadership position, we examine the significance of four key product areas; 1) the camera and augmented reality, 2) virtual avatars, 3) the Snap Map, and 4) hardware.
Camera and Augmented Reality: SNAP distinguishes itself from its peers by building products that leverage camera and AR technology as the principal drivers of engagement and user generated content. Currently, SNAP has 290M+ DAUs who create on average 5B snaps per day, open the app on average 30 times per day, and regularly use AR lenses to communicate with friends and brands (200M+ DAUs using AR). As we mentioned in the “Virtual Platforms” section of this report, the Metaverse is enabled by platforms that provide the “picks and shovels for content creation, the ongoing maintenance of live experiences, user interface, and social interactions”. We believe SNAP is beginning to successfully democratize its AR tool sets through its recently launched Lens Studio and Camera Kit. We highlight that the Lens Studio enables a community of 200K+ creators to build their own AR experiences using their own machine learning models. The Camera Kit makes the tools from the Lens Studio interoperable with partner apps like Zoom, the MLB, and Disney. In our view, SNAP is one of few platforms making AR technology easily accessible both inside and outside its App, which should support the company’s AR leadership for years to come…” (Click here to see the full text)
4. Twitter, Inc. (NYSE:TWTR)
Number of Hedge Fund Holders: 94
Twitter, Inc. (NYSE:TWTR) is a microblogging and social networking company, where users interact via tweets. Twitter, Inc. (NYSE:TWTR) is in the early stages of experimenting with “shoppable tweets”, a term the company has coined for tweets that display products for sale, along with a shop button.
Twitter, Inc. (NYSE:TWTR) has the capacity to convert real-time conversation with an engaged and intentional audience into sales.
Loop Capital analyst Alan Gould lowered the price target on the stock to $65 from $84 but kept a Buy rating on the shares on December 1. The analyst stated that not many investors see potential for Twitter, Inc. (NYSE:TWTR) to generate 25% top line growth, raising an “unanswerable question” on margin outlook and overhang for the stock after Twitter, Inc. (NYSE:TWTR) indicated that expenses will grow beyond the 25% floor already in place with existing programs.
Cathie Wood’s ARK Investment Management is one of the leading Twitter, Inc. (NYSE:TWTR) stakeholders from the 94 hedge funds that were long Twitter, Inc. (NYSE:TWTR) in Q3 2021. ARK Investment Management increased its stake in the company by 12% in the third quarter, holding 13.78 million shares worth $832.47 million.
Here is what Greenwood Investors has to say about Twitter, Inc. (NYSE:TWTR) in its Q3 2021 investor letter:
“Being entrepreneurial, by definition, means taking the path untraveled, and heading into the unknown with daring boldness. Offense playbooks, by design, must take competition by surprise. Coming from a humble place with brands and companies that were ridiculed by competitors, when Sergio put medium-term plans out to the market, they were not timid. He would always aim higher than anyone, especially his competitors, believed he and his team could reach. And while not every target was always achieved, the formidable results speak for themselves.
This past earnings season, as Twitter was the only social media company to deliver on guidance while also confirming the quarter ahead to be at least as good, the stock sold off materially as its monetizable daily active user (MDAU) targets in the medium-term were called into question. While founder Jack Dorsey is clearly unafraid to look foolish to the public, or even in front of congress, he also manages multiple businesses at the same time. Competitors openly make fun of him. But his team is exceptionally loyal to him, and they have set out very ambitious targets for themselves over the next few years. The recent sell-off in Twitter shares was like deja vu all over again, as I reminisced about the Fiat capital markets day in 2014, fittingly on Twitter in this tweet thread. With its product and revenue servers rebuilt, it can now innovate and launch new ad formats faster than ever before. We look forward to the Twitter team pressing its offense strategy as a major peer loses focus on its core business.”
3. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 156
Alphabet Inc. (NASDAQ:GOOG) is one of the Big Five US tech firms, and operates as the parent company of Google and Google Subsidiaries. YouTube is a Google subsidiary that operates as a video sharing social platform, and brands run their advertisements on monetized videos, where they link their products for sale as well. Content creators post reviews on YouTube, and the company creators are planning to integrate a direct shopping feature into the platform very soon.
In August 2021, active YouTube audience reached 1.86 billion users, and it is one of the most visited websites globally, making Alphabet Inc. (NASDAQ:GOOG) one of the best social commerce stocks to buy.
Tigress Financial analyst Ivan Feinseth raised the price target on Alphabet Inc. (NASDAQ:GOOG) to $3,540 from $3,185 and reiterated a Strong Buy rating on the shares. Alphabet Inc. (NASDAQ:GOOG)’s increasing artificial intelligence-first focus is driving greater product functionality and “significant” growth opportunities, according to the analyst.
A total of 156 hedge funds were bullish on Alphabet Inc. (NASDAQ:GOOG) in Q3 2021, and Chris Hohn’s TCI Fund Management is the leading company stakeholder, with a $7.86 billion position.
Here is what Saturna Capital Amana Funds has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2021 investor letter:
“Alphabet was a new addition to the Fund this year, as we believed it important to have exposure to the top online media and advertising company in the world. Some have raised concerns surrounding Alphabet’s exposure to political interference, but we take comfort from the belief that were the company to be broken up, it would quite likely be worth even more than as a single entity.”
2. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 248
Facebook, a Meta Platforms, Inc. (NASDAQ:FB) subsidiary, is the leading social commerce platform, followed by Instagram. Facebook has a Marketplace, individual seller groups, and official pages of multiple brands who use the platform to sell their products. Facebook and Instagram enable buyers to interact with brands and sellers via Messenger and Instagram direct messages, or smaller brands link their WhatsApp numbers to their pages, which makes Meta Platforms, Inc. (NASDAQ:FB)’s social networking sites the best and most integrated social shopping platforms.
Meta Platforms, Inc. (NASDAQ:FB)’s Facebook has 2.80 billion monthly active users, and a daily traffic of 1.84 billion users, as of Q3 2021. Instagram users also crossed over 2 billion in December 2021.
Loop Capital analyst Alan Gould on December 20 lowered the price target on Meta Platforms, Inc. (NASDAQ:FB) to $380 from $420 but kept a Buy rating on the shares. The magnitude of Meta Platforms, Inc. (NASDAQ:FB)’s spending on the Metaverse over the next several years and how rapidly the spending at Facebook Reality Labs will increase from the $10 billion being spent in 2021 will be a key focus for investors, according to the analyst.
Meta Platforms, Inc. (NASDAQ:FB) is one of the most popular stocks among the smart money. In Q3 2021, 248 hedge funds were bullish on Meta Platforms, Inc. (NASDAQ:FB), with stakes valued at over $38.5 billion. Fisher Asset Management is the largest Meta Platforms, Inc. (NASDAQ:FB) stakeholder, with a $2.56 billion position.
Here is what Canterbury Tollgate has to say about Meta Platforms, Inc. (NASDAQ:FB) in its Q3 2021 investor letter:
“To say traditional media is anti-Facebook would not be an overstatement. An already intense and multi-year critique of (or attack on) Facebook has ratcheted up in recent weeks. Facebook’s research efforts have been reported on, if often derided, for nearly a decade. Going back to 2014, Slate.com called their research practices “unethical” when FB tried to study the impact social posts had on users. Now those efforts have been turned against them for the kill shot.
My job is to observe, assess, and allocate. Not to commentate on all the whims and wishes of media narrative. However, in the case of Facebook I cannot avoid going into some detail re: the onslaught against them, which I find to be most unwarranted and insincere.
Last month the Wall Street Journal ran a five-piece series titled “The Facebook Files” which allegedly shows how toxic Instagram is for teens. The foundation of their argument was a single slide from an internal presentation claiming, based on FB’s own research, that of teens who had a negative self-image, one-third said Instagram “made them feel worse.”iii Somehow the implication here is that this is not an inescapable aspect of either the human psyche and/or society-at large, but that it is of Facebook’s doing…” (Click here to see the full text)
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 250
Microsoft Corporation (NASDAQ:MSFT), one of the biggest US tech firms, has several subsidiaries including LinkedIn, Skype, GitHub, and Yammer, among others. LinkedIn is a social networking platform for professionals to connect, network, look for employment, and it is one of the best recruiting websites worldwide. As of Q3 2021, Microsoft Corporation (NASDAQ:MSFT)’s LinkedIn has about 740 million users.
LinkedIn is one of the best social commerce platforms, where people discuss new products, innovative services are showcased, and professionals link their profiles to their Upwork Inc. (NASDAQ:UPWK) and Fiverr International Ltd. (NYSE:FVRR) accounts so clients can reach them for their services directly. In addition to that, smaller brands link their products in their page descriptions, company representatives engage in direct selling with users, and brands promote their products via LinkedIn posts and polls, keeping their target audience engaged and actively interested in the products and services.
SMBC Nikko analyst Steve Koenig on December 21 initiated coverage of Microsoft Corporation (NASDAQ:MSFT) with an Outperform rating and a $410 price target.
One of the leading Microsoft Corporation (NASDAQ:MSFT) stakeholders is Arrowstreet Capital, with almost 18 million shares worth more than $5 billion. In Q3 2021, 250 hedge funds reported owning stakes in Microsoft Corporation (NASDAQ:MSFT), up from 238 funds in the preceding quarter.
Here is what Baron Opportunity Fund has to say about Microsoft Corporation (NASDAQ:MSFT) in its Q3 2021 investor letter:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft’s results continued to be strong across the board, with total revenue beating Street estimates by 4.5%, an acceleration in Commercial Cloud revenue to 31% constant-currency growth, a four-point improvement in Commercial Cloud gross margins (to 70% from 66%), and GAAP earnings up 42%. We believe the company is positioned to deliver 13% to 15% organic growth over the next three years, underpinned by TAM expansion across its disruptive cloud product portfolio, as more companies look to transform and digitize their businesses, as well as strong operating leverage as its cloud products gain scale.”
You can also take a look at 10 Stocks to Buy and Hold According to Bill Gates and Top Stock Picks of Michael Burry.
