The average user spends roughly 3 hours daily on social media, checking the news, buying and selling things, and reading all kinds of content. If you're not just a user but also an investor, social media stocks can be considered an excellent addition to your portfolio.
AI and IT investments will make you not just rich. Your portfolio will survive all the turbulent times and earn you some good money. Are you ready to become a cutting-edge trader?
Today we will discuss how to choose the best social media stocks for your portfolio.
Why invest in social media stocks?
1. IT and AI markets are growing every day.
Leading social media stocks are gaining up to 40% in a year making social media businesses one of the most profitable and desirable for traders. Pandemic brought us long Zoom-sessions and an understanding even in the digitally conservative countries that social media are platforms for all kinds of communication that may exist in our society. During the lockdown, people used social media as online stores, chat rooms, platforms where we play, watch and even date. It’s clear now, that most of the pandemic-brought changes will stay up.
2. Social Media Industry is not about entertainment anymore.
10 years ago most of the existing social networks were tools for killing the time and finding your classmates and relatives. Now, platforms as Instagram became full-functioning business tools where services and goods are bought and sold. Many online businesses depend on a particular network which makes them vulnerable at some point but brings additional growth to well-known social media.
Market research has shown that more than half of people younger than 30 tend to buy and order things through social media platforms. The potential of Social Media Advertising is growing all over the world as well as the price of the best social network stocks in the financial market.
3. Long-term investment opportunities.
These companies not only invest in the core business but also in the new niches, for example, Facebooks invests in VR, Pinterest in AI, etc. The long term trend for digitalization will continue to dominate across markets and it would be irrational to ignore it and not add any IT companies to your portfolio. Gainy will help to choose the best social media stocks to invest in because we also care for your long-term perspectives.
Let’s start from top social media stocks in 2021
A highly visual social network finally made its jump into the e-commerce related field. Revenue growth was reported as $485 billion and the predicted 117% growth in the upcoming year. Worth buying? For sure. In 2020 Pinterest success was highly rated on Wall Street, and the pandemic hasn't bypassed the company's success yet. The main idea of this social network is the creation of boards with pictures. Now, in a partnership with Shopify, you may not only add a photo of "new wardrobe" into your board but click on it and buy it from a partner store which attracted more users.
Consider non-trivial options: the social media field is a huge one, and it's got a variety of companies worth considering investing in.
It is well-known for Tinder and other subscription-based apps where most revenue comes from the paid options inside the app rather than ads and the company founded by their former executive Bumble that we know for the Badoo app. Even Bumble is much smaller than Match group; they grew the paid user base up to 15% and boosted the revenue up to 31% for a year, making it an exciting candidate for investor portfolio. A good social media stock to buy right now!
We've reached the point when we can discuss giants as Facebook, Twitter, and Snapchat.
It would be an obvious stock to consider simply since you probably have WhatsApp, Instagram, and Facebook itself installed on your phone, and most likely, you use it every day. CAGR (Compound Annual Growth Rate) of Facebook is also impressive - 42%, which means that company is getting more and more profitable over the years.
How did the lawsuits affect your decision to buy Facebook stock?
The main con of buying a share is the latest antitrust allegations and a future lawsuit, which mainly affected the US market as one of the largest for Facebook, it would slow the company's growth. However, Facebook will not go anywhere anytime soon, and it will remain a stable-growing company for upcoming years. It is also worth saying that Facebook Messenger reached one billion users in 4.9 years while it took YouTube 8.1 years.
Another giant, Twitter, also lost points in the scandal by blocking accounts due to political reasons. Do we still consider Twitter the right choice to invest in? Elon Musk and Michelle Obama still actively post there, the idea to buy Clubhouse remains, and generally, yes, Twitter will not also go anywhere, and 13% CAGR is a good confirmation of that. Also, Twitter is becoming one of the big social media in terms of B2B business and more and more comapanies prefer to make main announcments there. Also, giant companies now pass Twitter from social media departments to public relations departments which make this app a very niche one and what it would mean for us - stable in terms of profit and growth.
It is one more option worth considering. Even CAGR is 45% which is as strong as Facebook, but with the appearance of TikTok on the stage, which took the lead in the spread of the viral content, the positions of Snapchat among teenagers and young adults will weaken. However, some excellent new additions such as augmented reality improvements and the fact that more than a billion snaps are being recorded make the company a long-term player. While the US and Europe have fun in TikTok, Snap hit 100% of year-to-year growth in India and thinks this market is the best for monetization tools and new features growth. Considering its high volatility, Snap is also in the list of best social media stocks for traders as it flies up and down 20% quite often.
One more idea to expand your portfolio is investing in social media stocks of Asian companies. Many Chinese companies are significant in combining e-commerce, sales, video games, and streaming services at once.
We all know Alibaba and Baidu, which remain strong positions on the market. One more company worth considering is Tencent, telecom and media conglomerate which runs the most prominent messenger and social platform app in China - WeChat that has about 1 billion active users monthly. Even with the regulations from the Chinese government that created a turbulent atmosphere for IT and AI companies, Tencent is a significant long-term investment.
Asian market is growing rapidly and Tencent is one of the examples of stable but innovative companies worth considering.
FYI: Tencent owns 4% of Tesla and 4% of Spotify also.
How do I choose the strategy for building up a portfolio based on social media shares?
Social media shares will be a great choice if you're a true believer in the AI market. For conservative investors aiming for a long-term run - choose big tech stocks like Facebook and Pinterest. Becuase of the resources they have, including money, they can buy small start-ups or invest in the development of new technologies which will drive long-term growth. For intrepid investors - look at smaller or not so recognized companies like Match and Tencent.
If you’re still scared to diversify your portfolio and not sure why to invest in social media stocks, we’re here to help find the best alternatives.
Gainy will help to build a perfectly balanced portfolio considering all the factors, goals and ideas that you have in mind.
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