In this article, we discuss the 10 best social commerce stocks to buy.
Social commerce refers to brands selling and advertising their products via social media platforms like Facebook, Instagram, Pinterest, and TikTok. Social media marketing has been trending and highly effective, and social commerce enables direct revenue generation as a result of social media marketing. In 2020, the market for social commerce was estimated at $559.7 billion, which is now projected to reach $2.9 trillion by 2026, growing at a CAGR of 30.8% over 2021 to 2026.
Following Facebook, Snapchat, YouTube, TikTok, and Instagram became more actively involved in social commerce, offering direct shopping features. According to a Shopify Inc. (NYSE:SHOP) representative, sales via social media platforms like Facebook and Instagram surpass several times the sales via direct websites of brands and merchants.
The leading markets for social commerce are the United States, China, Japan, Germany, and Europe. Social platforms like Instagram, Facebook, and Twitter act as discovery engines for brands, where influencers and celebrities are either using the products or endorsing them, which makes the masses aware of new offerings in the market.
Some of the most popular social commerce stocks to purchase include Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).
Our Methodology
We selected publicly listed social commerce companies that had positive analyst ratings, a solid financial position, and long-term growth catalysts.
Best Social Commerce Stocks To Buy
10. Tencent Holdings Limited (OTC:TCEHY)
Number of Hedge Fund Holders: N/A
Tencent Holdings Limited (OTC:TCEHY) is a Chinese multinational conglomerate that offers products and services in the technology and media sector. One of Tencent Holdings Limited (OTC:TCEHY)’s offerings is WeChat, a multipurpose application that allows instant messaging, digital payments, and social media networking. WeChat Business is a social commerce model developed by Tencent Holdings Limited (OTC:TCEHY), where B2C and B2B retailers advertise and sell their products. Similarly, for individual personalized selling to WeChat friends and subscribers, WeChat Salesperson mode is utilized.
On November 10, in the third quarter earnings report published by Tencent Holdings Limited (OTC:TCEHY), the company posted earnings per share of $0.51, missing estimates by $0.03. The $22.28 billion also missed estimates by $417.68 million.
Barclays analyst Jiong Shao initiated coverage of Tencent Holdings Limited (OTC:TCEHY) with an Overweight rating and a $84 price target on November 2. The analyst maintained a Positive view on the China Technology sector, stating that investors “can not ignore or not invest” in China since it is the second largest economy in the world, which is heavily supported by the Chinese government.
As of 2021, Tencent Holdings Limited (OTC:TCEHY)’s WeChat has 1.24 billion active users, making it one of the best social commerce stocks to buy.
9. Eventbrite, Inc. (NYSE:EB)
Number of Hedge Fund Holders: 17
An American event management and ticketing website, Eventbrite, Inc. (NYSE:EB) offers a digital platform to users that enables them to browse and promote local events. The Eventbrite, Inc. (NYSE:EB) platform assists with online payments for tickets, unless the events are free. This way, local artists, individual small-scale sellers, startups, and local brands can promote their exhibitions and get new customers.
Eventbrite, Inc. (NYSE:EB) announced its financial results for the third quarter on October 28, posting a loss per share of $0.17, missing estimates by $0.06. The revenue jumped 144.04% to $53.37 million, missing estimates by $533,000.
JPMorgan analyst Doug Anmuth lowered the price target on Eventbrite, Inc. (NYSE:EB) on December 15 to $17 from $21 and kept a Neutral rating on the shares. Heading into 2022, the analyst believes the internet group is in a stronger position than pre-pandemic amid increased digitization of the economy, and he prefers e-commerce and subscription based names over online advertising.
According to the Q3 records maintained by Insider Monkey, 17 hedge funds were long Eventbrite, Inc. (NYSE:EB), and Portsea Asset Management is the leading company stakeholder as of September 2021. The firm increased its stake in Eventbrite, Inc. (NYSE:EB) by 226% in the third quarter, with the total stake amounting to approximately $114 million.
Eventbrite, Inc. (NYSE:EB) is one of the best social commerce stocks to buy now, in addition to Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).
Here is what Artisan Partners has to say about Eventbrite, Inc. (NYSE:EB) in its Q2 2021 investor letter:
“Eventbrite is the largest software and ticketing platform helping event creators plan, promote and produce live events in small-and-mid markets. The company generates revenue by charging a per-ticket fee on paid tickets and has a strong foothold in the small-and-mid markets—nearly 20X the size of the next largest competitor. We believe Eventbrite is well-positioned to benefit from a sharp increase in demand for live events amid the broader re-opening of the US economy—a dynamic it has already witnessed in Australia with live events bouncing back to approximately 90% of 2019 levels. We expect this to be amplified by significant cost cuts made during the pandemic (>30% of 2019 revenue) remaining in place. Longer term, we believe Eventbrite should benefit from the secular trend toward consumer experiences, an industry growing over 8% per year prior to the pandemic.”
8. Groupon, Inc. (NASDAQ:GRPN)
Number of Hedge Fund Holders: 18
Groupon, Inc. (NASDAQ:GRPN) is one of the best social commerce platforms, offering discounted deals and coupons for consumer products including fashion goods, home goods, and accessories, in addition to discounted offers on vacation packages, travel deals, and ticketed events.
As of Q3 2021, 18 hedge funds tracked by Insider Monkey were bullish on Groupon, Inc. (NASDAQ:GRPN), down from 28 funds in the preceding quarter. The largest Groupon, Inc. (NASDAQ:GRPN) stakeholder is PAR Capital Management, increasing its stake in the company by 104% in the third quarter, holding 2.78 million shares worth $63.4 million.
On November 4, Groupon, Inc. (NASDAQ:GRPN) announced its third quarter results, posting an EPS of $0.38, beating estimates by $0.32. The $214.17 million revenue dropped 29.55% year-over-year, missing estimates by $2.19 million.
Ascendiant analyst Edward Woo on December 23 lowered the price target on Groupon, Inc. (NASDAQ:GRPN) to $35 from $40 and kept a Buy rating on the shares. According to the analyst, Groupon, Inc. (NASDAQ:GRPN) reported Q3 earnings upside but “mixed” new 2021 guidance. He believes that with a new CEO and outlook, Groupon, Inc. (NASDAQ:GRPN) will continue to improve amid vaccine rollouts and ongoing economic recovery. The analyst sees a favorable risk/reward at current share levels.
7. NetEase, Inc. (NASDAQ:NTES)
Number of Hedge Fund Holders: 32
NetEase, Inc. (NASDAQ:NTES), a Chinese tech company providing online services including content, community, communications, and commerce, is one of the best social commerce stocks to invest in. Via its online community, NetEase, Inc. (NASDAQ:NTES) advertises products on its ecommerce platforms. The company is also one of the biggest video game developers in the world.
NetEase, Inc. (NASDAQ:NTES) posted its Q3 results on November 16, announcing an EPS of $0.90, missing estimates by $0.06. The $3.47 billion revenue increased 22.40% from the prior-year quarter, exceeding estimates by $145.33 million.
On November 17, Citi analyst Alicia Yap lowered the price target on NetEase, Inc. (NASDAQ:NTES) to $136 from $142 and kept a Buy rating on the shares. According to the analyst, NetEase, Inc. (NASDAQ:NTES) reported “solid” Q3 results and will “remain as a defensive play in light of macro uncertainty impact to other internet verticals”.
A total of 32 hedge funds tracked by Insider Monkey reported owning stakes worth $2.32 billion in NetEase, Inc. (NASDAQ:NTES) in the third quarter. The largest NetEase, Inc. (NASDAQ:NTES) stakeholder is Orbis Investment Management, with 16.3 million shares worth $1.39 billion.
6. Pinterest, Inc. (NYSE:PINS)
Number of Hedge Fund Holders: 58
Pinterest, Inc. (NYSE:PINS) is a social media platform that allows users to share images, GIFs, and videos on its website. Users can save their ideas in the form of pinboards, and companies and individual sellers use Pinterest, Inc. (NYSE:PINS) for social commerce by hiring influencers who link products on their profiles for customers to purchase.
Reporting its Q3 results on November 4, Pinterest, Inc. (NYSE:PINS) posted earnings per share of $0.28, beating estimates by $0.05. Revenue over the period equaled $632.93 million, up 43% from the preceding year quarter, outperforming estimates by $1.83 million.
Citi analyst Jason Bazinet lowered the price target on Pinterest, Inc. (NYSE:PINS) to $42 from $48 and kept a Neutral rating on the shares on December 22. The analyst reduced the company’s multiple to better reflect its growth prospects relative to its social media peer group.
Pinterest, Inc. (NYSE:PINS) is a popular social commerce stock among hedge funds, as the third quarter database of Insider Monkey suggests that 58 funds were long Pinterest, Inc. (NYSE:PINS). Andreas Halvorsen’s Viking Global recently purchased stakes worth $368.4 million in Pinterest, Inc. (NYSE:PINS), making the stock a new addition in his Q3 portfolio.
Hedge funds are leaning towards Pinterest, Inc. (NYSE:PINS), in addition to Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).
Here is what Baron Opportunity Fund has to say about Pinterest, Inc. (NYSE:PINS) in its Q3 2021 investor letter:
“Visual search, discovery, and inspiration platform Pinterest, Inc. detracted from performance after the company provided disappointing monthly active user engagement metrics despite a strong quarter financially (revenue growth of 125% and almost 30% operating cash flow margins). As the economy reopened and COVID-19-related restrictions were lifted, user engagement for web users (who tend to be less engaged and generate less revenue) declined. At the same time, the company pivoted to a new video based engagement model, called Idea Pins. The transition to Idea Pins (not yet monetized) may cannibalize some monetized engagement in the near term, thus penalizing short-term revenues, but we remain encouraged by the long runway for growth as Pinterest improves its platform and expands internationally.”
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.”
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Disclosure: None. 10 Best Social Commerce Stocks To Buy is originally published on Insider Monkey.
