5 Cheap Social Media Stocks to Buy According to Hedge Funds

In this article, we discuss 5 cheap social media stocks to buy according to analysts. If you want to see more stocks in this selection, check out 10 Cheap Social Media Stocks to Buy According to Hedge Funds. 

5. Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Holders: 152

P/E Ratio as of April 4: 22.97

Alphabet Inc. (NASDAQ:GOOG), the parent company of Google, operates several social media platforms. The most well-known of these include YouTube, Blogger, and Google Meet. Formerly, the company operated Google+, which was a social networking platform that aimed to compete with Facebook but was shut down in 2019. Alphabet Inc. (NASDAQ:GOOG) is one of the best cheap social media stocks to invest in. 

On March 20, Stifel analyst Mark Kelley initiated coverage of Alphabet Inc. (NASDAQ:GOOG) with a Buy rating and a price target of $130. According to the analyst, early demos of Microsoft’s Bing via OpenAI have been impressive while Google’s demos have been disappointing. However, the analyst does not expect a significant change in consumer behavior or spending on search ads. Alphabet Inc. (NASDAQ:GOOG) has been focusing on AI for some time, and the analyst predicts that more AI-based searches may slightly affect the company’s margins. The firm believes that Alphabet Inc. (NASDAQ:GOOG) will take proactive measures to satisfy regulators before the DOJ case is resolved. Additionally, Kelley sees a considerable opportunity for YouTube and YouTube TV.

According to Insider Monkey’s fourth quarter database, 152 hedge funds were bullish on Alphabet Inc. (NASDAQ:GOOG), compared to 156 funds in the prior quarter. Chris Hohn’s TCI Fund Management is the largest stakeholder of the company. 

Weitz Partners III Opportunity Fund made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its Q4 2022 investor letter:

“Unfortunately, the performance story of the year is told by the Fund’s detractors. Now, weakening ad spending across all channels has added insult to injury, and concerns have spread to the other dominant digital ad player, Alphabet Inc. (NASDAQ:GOOG) — parent of Google and YouTube.

Meta, Alphabet, Amazon and CarMax were all top detractors for the quarter and calendar year periods (FIS and Liberty Broadband, respectively, complete the quarterly and calendar-year detractor lists.) To varying degrees, each is managing through cyclical challenges during a period of substantial investor pessimism. Drawdowns of this magnitude are painful, and it may be prudent for management to moderate the pace of some investments, but we remain encouraged by their long-term focus. In the short run, cutting spending indiscriminately to “defend earnings” may lessen the pain of a drawdown, but it seldom grows a company’s business value — the ultimate prize.”

4. Meta Platforms, Inc. (NASDAQ:META)

Number of Hedge Fund Holders: 194

P/E Ratio as of April 4: 24.25

Meta Platforms, Inc. (NASDAQ:META)’s Family of Apps segment offers Facebook, Instagram, Messenger, and WhatsApp. These applications enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. It is one of the best cheap social media stocks to invest in. 

On March 30, Stephen Ju, an analyst at Credit Suisse, increased the firm’s price target for Meta Platforms, Inc. (NASDAQ:META) from $220 to $251 and maintained an Outperform rating on the shares prior to the release of quarterly results. According to the firm, Meta Platforms, Inc. (NASDAQ:META) has already announced two rounds of cost cuts, and the investment rationale now depends on revenue growth outperformance. Credit Suisse highlighted that Meta has made up for the $10 billion in lost revenue after ATT by using Click-to-Message and believes there is a lot of potential for revenue growth for both Messenger and WhatsApp. In addition, the firm noted that Instagram’s recent announcement of showing ads within search results can bring in a new stream of high-margin revenue, which could potentially reach close to $1 billion over the next few years.

According to Insider Monkey’s fourth quarter database, 194 hedge funds were long Meta Platforms, Inc. (NASDAQ:META), compared to 177 funds in the prior quarter. Boykin Curry’s Eagle Capital Management is the largest stakeholder of the company, with more than 9 million shares worth $1 billion. 

Davis New York Venture Fund made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its 2022 annual investor letter:

“As both a “blue chip of tomorrow” and a company languishing under “headline risk,” our investment in Meta Platforms, Inc. (NASDAQ:META) reflects these two investment themes. With more than three billion daily users across its three platforms (Facebook, Instagram and WhatsApp), Meta has more users than almost any company in history. Despite this success, Meta currently languishes under a cloud of skepticism concerning two issues: competition from other services, such as TikTok, and significantly increased spending both on artificial intelligence (AI) and speculative new ventures including virtual reality and augmented reality (often referred to as the metaverse).

Starting with competition, despite the drumbeat of negative headlines, which leads most investors to assume that Facebook’s core businesses are shrinking, Figure 9 shows continued growth in the number of users on their core service, including Facebook (green bars), as well as the company’s entire family of applications.

The gold line in Figure 9 shows Meta’s ad revenue per user up more than 30% since 2019 but down from last year’s peak. While we find this decline concerning, it is hardly surprising given the slowing economy and time needed for Facebook to adjust to changes made by Apple—somewhat disingenuously in the name of privacy—that reduced the efficacy of some of Meta’s advertising while favoring Apple. We highlight this decline as a risk but believe it will prove temporary. We think that Meta’s growing user base as well as the continued growth in the amount of time users are spending on these platforms is a far more important indicator of Meta’s relevance and value…” (Click here to view the full text)

3. PubMatic, Inc. (NASDAQ:PUBM)

Number of Hedge Fund Holders: 12

P/E Ratio as of April 4: 27.45

PubMatic, Inc. (NASDAQ:PUBM) provides a cloud infrastructure platform that allows real-time programmatic advertising transactions for Internet content creators and advertisers worldwide. The company’s platform supports a range of ad formats and digital device types, including mobile app, mobile web, desktop, display, video, over-the-top, connected television, and media. It is one of the best cheap social media stocks to monitor. On February 28, PubMatic, Inc. (NASDAQ:PUBM) announced that its board of directors authorized a share repurchase program. Through the program, the company may repurchase up to $75 million of Class A common stock through the end of 2024.

Matthew Swanson, an analyst at RBC Capital, maintained an Outperform rating on PubMatic, Inc. (NASDAQ:PUBM) but reduced the price target on the shares from $24 to $20 on March 1. Swanson noted that the company’s Q4 performance was affected by macro factors more than expected. Although demand has since improved, the management is still wary of the future due to a slower macro recovery compared to its peers. PubMatic, Inc. (NASDAQ:PUBM) did not provide revenue guidance for the year, but they are taking measures to ensure profitability. 

According to Insider Monkey’s fourth quarter database, 12 hedge funds were long PubMatic, Inc. (NASDAQ:PUBM), and Cliff Asness’ AQR Capital Management is a significant stakeholder of the company, with 33,812 shares worth $433,132. 

2. Match Group, Inc. (NASDAQ:MTCH)

Number of Hedge Fund Holders: 54

P/E Ratio as of April 4: 28.81

Match Group, Inc. (NASDAQ:MTCH) offers dating services globally through a range of apps and websites. The company owns and manages a collection of brands such as Tinder, Match, The League, Azar, Meetic, OkCupid, Hinge, Pairs, PlentyOfFish, and Hakuna, among others. Match Group, Inc. (NASDAQ:MTCH) was established in 1986 and is headquartered in Dallas, Texas. 

The company expects to achieve a year-over-year growth of 5% to 10% in overall revenue and Tinder’s direct revenue for the entire year 2023. Match Group, Inc. (NASDAQ:MTCH) anticipates that its revenue growth will gradually increase from the levels of the fourth quarter of 2022 and will reach double digits by the fourth quarter of 2023. Projections indicate that Hinge will generate approximately $400 million in direct revenue during 2023. It is one of the best cheap social media stocks to invest in. 

On March 30, Citi maintained a Neutral rating on Match Group, Inc. (NASDAQ:MTCH) and lowered the firm’s price target on the shares to $40 from $54. Citi’s first monthly online dating data tracker revealed that Bumble and Hinge are experiencing significant growth while Tinder is facing more challenges. The company’s target was trimmed due to the continued decline in Tinder’s data, as reported by SensorTower. Citi’s note added that Tinder witnessed a decline in active users, time spent, and downloads during Q1.

According to Insider Monkey’s fourth quarter database, 54 hedge funds held stakes worth $730.3 million in Match Group, Inc. (NASDAQ:MTCH), compared to 54 funds in the prior quarter worth $621 million. 

RGA Investment Advisors made the following comment about Match Group, Inc. (NASDAQ:MTCH) in its Q4 2022 investor letter:

“Match Group, Inc. (NASDAQ:MTCH), a long-term holding of ours offers an important illustrative example of these effects. Tinder grew reported revenues 6% year-over-year, accelerating a debate about whether this particular asset has reached a plateau in its growth curve; however, revenues grew 16% on an FX neutral basis. Has this asset stalled or is it a mid-teens grower? Other factors will determine the one true answer to this question, though FX and the stated headline make the answer seem obvious when it is not. When foreign exchange movements are modest, people tend to focus more on FX neutral assuming those changes will normalize over time, yet when movements are extreme the headline takes prominence.”

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 259

P/E Ratio as of April 4: 32.18

Microsoft Corporation (NASDAQ:MSFT)’s social media applications include LinkedIn, Yammer, Microsoft Teams, Skype, Microsoft Stream, and Flipgrid. It is one of the best social media stocks to invest in. According to Morgan Stanley, the most recent CIO survey suggests that IT spending will remain stable and Microsoft Corporation (NASDAQ:MSFT) has favorable fundamentals. The survey showed several forward-looking indicators that indicate Microsoft’s strong relative position if 2023 budgets come under pressure. The company has widened its lead in expected IT wallet share gains. Based on the survey, Morgan Stanley believes that Microsoft Corporation (NASDAQ:MSFT) is “increasingly well positioned” and reiterated an Overweight rating with a $307 price target on the shares on March 30. 

According to Insider Monkey’s fourth quarter database, 259 hedge funds were bullish on Microsoft Corporation (NASDAQ:MSFT), compared to 269 funds in the prior quarter. Bill & Melinda Gates Foundation Trust is the biggest position holder in the company, with 39.2 million shares worth $9.4 billion. 

Diamond Hill Large Cap Concentrated Strategy made the following comment about Microsoft Corporation (NASDAQ:MSFT) in its Q4 2022 investor letter:

“Other bottom contributors to return included railroad operator Union Pacific, software and IT services provider Microsoft Corporation (NASDAQ:MSFT), and banking and financial services company Truist Financial. Union Pacific and Microsoft, though among our bottom contributors, still contributed positively to performance in Q4 as their share prices rose 7% and 3%, respectively. Truist’s stock ended flat in Q4.”

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