In this article, we will look at 7 Cheap Social Media Stocks to Invest In.
Social Media Platforms for News Consumption
Digital sources, especially social media, have become a critical part of the news diets of Americans. According to the Pew Research Center, more than half of US adults (54%) sometimes get news from social media. This number has risen compared to the past few years. Facebook and YouTube are the most popular places for US citizens to consume news, especially election-related updates, just days before Americans set out to choose their next president. Around a third of US adults say they regularly absorb news from these two sites.
However, despite having relatively small overall audiences, some social media platforms are becoming increasingly popular news destinations among their users. For instance, around 59% of X users say that they get news from the platform, while 57% of Truth Social users say the same, which is the site owned by former POTUS Donald Trump. In contrast, only 14% of LinkedIn users regularly get news from the platform. TikTok is another social media platform gaining increasing popularity, especially among the younger generation. Around 52% of TikTok users get regular news from the platform. This number grew from 43% in 2023 and just 22% in 2020. YouTube and Instagram are also gaining more followers, highlighting the increasing role of social media platforms in disseminating news. These trends hold special significance in the current US landscape, with presidential campaigns in full swing.
The US Election Campaign and Social Media
Platforms like Facebook, Instagram, and X are increasingly developing new ways to market political campaigns, allowing more and more voters and candidates to interact. These platforms have also reversed their ban on former POTUS Donald Trump since he is once again back in the presidential race. However, the circumstances pose a serious responsibility on such social media platforms: a legal obligation to offer a safe environment to their users amid expectations that they provide former POTUS Trump a platform that is not restricted or over-regulated for their campaigns, especially when compared to his political opponents.
Social media is thus being used as one of the most powerful tools in a presidential campaign’s toolbox. However, the use of these platforms is also raising concerns surrounding the echo chamber and bandwagon effect. According to research published in the Proceedings of the National Academy of Sciences in 2021, content curation by social media platforms created political echo chambers. These chambers are a natural part of a social media platform’s impersonal algorithm that shows users the content they are interested in by analyzing their engagement. Thus, a platform is very likely to continually recommend left-leaning content to a politically left-leaning person, and vice versa.
Social media echo chambers, therefore, lead to the bandwagon effect, reinforcing and amplifying mass media’s messages and affecting the public’s perception of candidates and their operations. Such happenings allow misinformation to spread quickly and run rampant. According to statistics by the Pew Research Center comparing the political perceptions of 2016 and 2020, the number of people who found social media-led political discussions “interesting and informative” fell from 35% in 2016 to 26% in 2020.
However, these drawbacks do not undermine the critical importance of social media platforms in disseminating news, swaying public perception, and acting as a tool in the current politically charged landscape.
With these trends in mind, let’s look at the 7 cheap social media stocks to invest in.
Photo by Jakob Owens on Unsplash
Our Methodology
We first consulted ETFs and online rankings to create an initial list of 20 publicly traded social media companies with forward P/E ratios of less than 20. From this list, we selected the 7 stocks with the highest number of hedge fund holders as of Q2 2024 and used that as our ranking metric.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
7 Cheap Social Media Stocks to Invest in
7. Tencent Holdings (OTC:TCEHY)
Forward P/E: 15.9
Analysts’ Upside Potential: 20.94%
Number of Hedge Fund Holders: 1
Tencent Holdings (OTC:TCEHY) is a holding company that provides value-added services (VAS), online advertising, FinTech, and business services. This Chinese multinational technology conglomerate is one of the largest grossing multimedia companies in the world by revenue and operates social media platforms such as WeChat, Qzone, and QQ Messenger. Tencent Holdings (OTC:TCEHY) operates through four segments: the VAS Segment, the Online Advertising segment, the FinTech and Business Services segment, and the Other segment.
The VAS segment encompasses video account live broadcast services, online games, paid video membership services, and other social network services. The Online Advertising segment manages media advertising, social media, and other advertising businesses. The FinTech and Business Services segment deals with FinTech and cloud services, while the Other segment manages the investment, production, and distribution of television programs and films for third parties, merchandise sales, copyright licensing, and other activities.
The company has a promising financial standing. Its domestic and international games revenue increased due to growing user engagement and the successful launch of some of its new games. Total revenue for Q2 2024 increased by 8% year over year. Tencent Holdings (OTC:TCEHY) is increasingly focusing on its Communications and Social Network, enhancing content and functionalities across its platforms. These include Video Accounts, Mini Programs, and Tencent Channels. User time-spend for Video Account grew significantly year over year in the quarter, primarily due to more local content and enhanced algorithms. In addition, the company’s thriving algorithm is allowing creators to increase revenue generation by reaching a wider audience.
Tencent Holdings (OTC:TCEHY) is also facilitating e-commerce activity by systematically improving transaction capabilities to ensure a seamless shopping experience for users and boost sales for merchants. Its Mini Programs have become a significant platform for users to connect with content providers and merchants offline and online. Such initiatives are painting an optimistic picture for the company, placing it 7th on our list of the 7 cheap social media stocks to invest in.
6. Yalla Group Limited (NYSE:YALA)
Forward P/E: 5.81
Analysts’ Upside Potential: 34.43%
Number of Hedge Fund Holders: 4
Yalla Group (NYSE:YALA) is a holding company based in the United Arab Emirates. Through its subsidiaries, it operates in one segment: the social networking and entertainment platform. Yalla Group operates a voice-centric social networking and entertainment platform in the North Africa and Middle East region. Users can use Yalla, the company’s mobile application, to conduct online voice-based chatting or live streaming. Yalla Ludo is another platform for voice-based chatting while playing board games such as Ludo and Domino. Users can access the platform’s basic functions for free.
Yalla Group (NYSE:YALA) operates through Yalla United Arab Emirates, Shenzhen Moov, and Hangzhou Yale. Yalla UAE acts as the primary business operation center, managing marketing, sales, customer service, and other business operations, while Hangzhou Yale conducts product development and technology functions.
Yalla Group (NYSE:YALA) is running on strong fundamentals. Its Q2 2024 results beat the upper end of its guidance even with the impact of one month of Ramadan. Revenues reached $81.2 million, highlighting the growing profitability and popularity of Yalla and Yalla Ludo. The company’s operating efficiency improvement also yielded positive results, raising its net margin to 38.6% in Q2. Yalla Group (NYSE:YALA) remained dedicated to improving its operational procedures in Q2, optimizing technology utilization to increase efficiency, improving user engagement, and refining its user acquisition strategy.
The company is also capturing the potential of the gaming sector in the MENA region by consistently investing in its mid-core and hard-core game markets. It is focusing on the divestment and acceleration of mid-core and hard-core games, with its product teams developing and refining a solid pipeline of self-developed games to debut throughout 2025. The company is also exploring applications of AI to optimize productivity, especially in UI design.
5. Weibo Corporation (NASDAQ:WB)
Forward P/E: 4.96
Analysts’ Upside Potential: 13.10%
Number of Hedge Fund Holders: 15
Weibo (NASDAQ:WB) is a China-based social media platform that allows people to create, share, and discover content online. Weibo Corporation (NASDAQ:WB) operates in two segments: Advertising and Marketing segment and Value-added Services segment. The Value-added Services segment encompasses social platforms, online games, live broadcasts, social e-commerce, and others. The Advertising and Marketing segment delivers an array of advertising customization and marketing solutions.
The company also engages in the provision of online game operations, provision of internet content, and other related businesses. Through the Weibo platform, users can create, discover, share, and consume various kinds of content, including video, photo, text, live streaming, and audio. Despite its other operations, the company’s primary product is the social platform Weibo.
Weibo (NASDAQ:WB) reached 583 monthly active users and around 256 daily active users in Q2 2024. To continue this positive trajectory, it is adjusting its user strategy for 2024, allocating more channel budget to the acquisition and engagement of high-quality users.
The company’s total revenues reached $437.9 million in Q2, of which ad revenues reached $375.3 million. It has been focusing on merging Weibo’s hot trend products with marketing and advertising demand. These efforts have resulted in its hot trend marketing gaining a competitive advantage by being recognized by several industries and advertisers.
Weibo’s (NASDAQ:WB) primary focus for 2024 is growing user engagement and sales, improving operational efficiency, and bolstering the competitiveness of its content ecosystem. It has maintained close cooperation with handset manufacturers on the channel front, prioritizing promoting user engagement and acquiring high-value users. It is also making further investments to refine its algorithm accuracy and targeting capacity of its business model to create suitable content offerings to its channel users and accelerate their user engagement. Such initiatives are expected to lay an even more solid foundation for monetization. Weibo (NASDAQ:WB) ranks fifth on our list of the top cheap social media stocks to invest in.
4. JOYY Inc. (NASDAQ:YY)
Forward P/E: 9.96
Analysts’ Upside Potential: 6.38%
Number of Hedge Fund Holders: 21
JOYY (NASDAQ:YY) is a global technology company that operates several social products, including Bigo Live for live streaming, Hago for multiplayer social networking, Likee for short-form videos, an instant messaging product, and others. It operates through two segments: BIGO and All Other. The BIGO segment encompasses several social entertainment platforms, including Bigo Live, imo, Likee, and others. The All Other segment manages Hago, Shopline, and a particular audio live-streaming platform.
Bigo Live allows users to socialize, connect with other users, share their life moments, and show their talents. Likee allows users to create, discover, and share short-form videos. It also features all-in-one video tools, such as special effects, filters, and AI-enabled personalized feeds. Hago, in contrast, offers casual games and integrated social features to its users, such as audio and video multiuser chatrooms and 3D virtual interactive party games.
JOYY (NASDAQ:YY) is generating robust cash flow through its businesses, allowing it to focus on its near-term core strategy while prioritizing long-term growth prospects. It is advancing continuous product innovation and focusing on optimizing user social interactions and content experience to improve user satisfaction. The company is experiencing significant growth potential in its global business and is leveraging its user-centric approach and product capabilities to boost the expansion of its global user community.
It is also focusing on innovative features directly affecting user interaction with its platform, such as Bigo Live’s Real Match feature which allows users space to meet new people. Real Match’s daily active users have nearly doubled in the past six months, exceeding 20% and boosting Bigo Live’s registration, payment conversion, and overall ROI. Such improvements give the company a competitive edge.
The company is also focusing on enhancing growth with operational efficiency to boost expansion in group and product profitability. The stock sports a consensus Buy rating among analysts, with its median price target implying an upside of 6.38% from current levels. It takes the fourth spot on our list of the top cheap social media stocks to invest in.
3. Yelp Inc. (NYSE:YELP)
Forward P/E: 9.8
Analysts’ Upside Potential: 15.46%
Number of Hedge Fund Holders: 26
Yelp (NYSE:YELP) is a social platform that connects consumers with businesses. Its website and mobile app publish crowd-sourced reviews about businesses. It offers consumer-interactive tools and features to facilitate transactions between local businesses and consumers. The company’s advertising products allow businesses to reach a larger audience, irrespective of the size of their operations.
Businesses can drive conversion of their services while users can use the social platform to make well-informed decisions. It offers subscription services, licensing payments for access to Yelp data and other non-transaction, non-advertising arrangements. Yelp’s (NYSE:YELP) advertising products are sold online, through its website, through the Yelp for Business app, and indirectly through partners.
Yelp (NYSE:YELP) offers several free and paid advertising products to businesses of all sizes, including CPC Advertising (Yelp Ads) and Multi-location Ad Products. The company’s business page products include Upgrade Package, Free Business Account, Business Highlights, Branded Profile, Portfolio, Enhanced Profile, Yelp Connect, Logo, and Nearby Jobs.
Yelp (NYSE:YELP) delivered record net revenue and strong profitability in Q2 2024. It is continuing to leverage its product-led strategy to drive growth and profitability, especially in-home services and self-serve channels. Home services experienced a 15% year-over-year growth in Q2, while self-serve channels underwent a revenue increase of around 20% year over year, reaching record level.
The company is also continually updating its service products. Yelp Assistant, a new conversational AI feature, is a prominent example. Yelp Assistant makes finding and hiring service professionals considerably easier. The company also introduced the Yelp Fusion AI API, which brings Yelp’s trusted content to third-party platforms through natural language search. The revamped Yelp Guest Manager is another significant update, helping restaurants enhance efficiency, improve guest experiences, and seat more diners.
Despite challenges in the operating environment for retail, restaurants, and other businesses, Yelp (NYSE:YELP) has plans in place to build upon its strong momentum in services. It is focusing on executing against its robust product roadmap to deliver improved consumer experience and service pros. Yelp (NYSE:YELP) takes the third spot on our list of the 7 cheap social media stocks to invest in.
2. Bumble Inc. (NASDAQ:BMBL)
Forward P/E: 6.35
Analysts’ Upside Potential: 9.63%
Number of Hedge Fund Holders: 26
Bumble (NASDAQ:BMBL) is a social networking and online dating application that operates through subscription and in-app purchases of products in Europe, North America, and several other countries. The company provides these services through the various websites and applications it owns and operates. Its five primary apps of operation include the Bumble app, Bumble for Friends app, Badoo app, Official app, and Fruitz app.
Users of the Bumble app can input their information and set up customizable profiles to connect with others. Badoo app users can also customize their profiles in several ways, such as by using the Moods feature. Apart from dating, the Bumble app provides products that allow social connection, allowing users to develop platonic connections through the BFF mood for friendships and Bizz mode for professional networking and mentorship.
The company is continuously evolving its product offerings. It launched the first chapter of Bumble App’s Evolution, rolling out a refreshing-looking feel, opening moves, enhanced onboarding, and improved profile creation plans. The launch achieved the company’s two significant objectives: delivering a better experience for women and boosting engagement. Since Bumble (NASDAQ:BMBL) is experiencing an increase in users with high-quality profiles and matches for women, it is on the path to achieving the customer value that drives long-term sustainable growth.
The company’s future plans are centered on three primary areas: its revenue strategy, customer experience, and ecosystem. Fostering a vibrant ecosystem will allow improved retention, better engagement, and more successful outcomes for its customers, driving growth. In addition, Bumble (NASDAQ:BMBL) is redirecting its experiential and re-engagement marketing strategies to mature markets with strong brand recognition.
Bumble (NASDAQ:BMBL) is investing in marketing technology and data to achieve its goals, including improved analytics capability to personalize customer reach and optimize the RPO of its spending across various markets. It is also continuing its product innovation strategy, working on the next chapters of the Bumble app evolution. It is set to launch several new features through the fall and early winter, including new interest filters, more options for making opening moves, customization to its chat timer, and improvements in its core matching algorithm.
1. Match Group, Inc. (NASDAQ:MTCH)
Forward P/E: 11.98
Analysts’ Upside Potential: 18.77%
Number of Hedge Fund Holders: 43
Match Group (NASDAQ:MTCH) provides digital technologies through its elaborate portfolio of brands, including Tinder, Hinge, Match, OkCupid, Meetic, Pairs, Azar, Plenty Of Fish, Hakuna, and others. The Match platform falls in the online dating category, allowing users to search profiles and receive algorithmic recommendations. It also offers a one-to-one real-time video feature.
Meetic and Pairs are online dating brands in France and Japan, respectively, with Pairs also holding a presence in South Korea and Taiwan. The Hakuna application offers live streaming services in Japan and Korea, while Plenty of Fish is an interactive, social app where users can experience one-to-many live streaming. In addition, Azar is a one-to-one video chat service that allows users to interact and meet people from across the globe in their native language. Azar is powered by real-time language translations.
Match Group’s (NASDAQ:MTCH) key elements are working in its favor. Tinder is stabilizing, Hinge is experiencing rapid expansion, and Azar is also performing strongly. Similarly, Pairs is driving user strength across its operations. User and payer trends are thus stabilizing in the company and are expected to continue on a positive trajectory. The company expects strong sequential payer growth in Q3 3034, with improved year-over-year monthly active user trends in the second half of the year.
Match Group (NASDAQ:MTCH) is undertaking several initiatives to continue growth. Tinder is integrating artificial intelligence to simplify and enhance the dating experience through a fresh and innovative approach. It is employing AI-driven tools such as Photo Selector, cleaning its ecosystem, and testing enhanced tools to improve the platform’s authenticity and effectiveness.
New marketing campaigns by Hinge are also driving new user growth, and Azar is experiencing strong financial momentum due to successful expansion into Europe and cutting-edge product innovation. Match Group (NASDAQ:MTCH) is expected to become the owner of the leading dating apps in the world in the coming quarters, reflecting its strong operational model.
While we acknowledge the potential of MTCH as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MTCH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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