Below we presented the list of 5 best social media stocks to buy now. For our detailed discussion and a more comprehensive list please see 12 best social media stocks to buy now.
5. IAC/Interactivecorp (NASDAQ:IAC)
No of HFs: 72
Total Value of HF Holdings: $1.61 Billion
IAC is ranked as the fifth-best social media stock to buy now. The company provides media and internet services worldwide. The company operates thorugh five sectors: ANGI Homeservices, Vimeo, Dotdash, Search and Emerging & Others. An insider recently purchased 100 shares at around $123. The stock is up more than 55% since then.
Check out this article where Spree Capital made a few comments on the stock.
In our Q4 2019 letter we wrote about our rationale for investing in Match Group (MTCH). Early in the third quarter we used market confusion over the mechanics of the Match Group spinoff to build a position in IAC/InterActiveCorp (IAC) at a discount to IAC’s stake in publicly traded ANGI Homeservices (ANGI) and the cash on IAC’s balance sheet. Confusion over IAC’s debt transfer to Match Group and cash accruing to IAC from Match Group’s secondary proceeds and special dividend created a situation where we were being paid to take ownership in a host of great businesses that are set to compound shareholder value over the long term. IAC has often traded at a curious discount to the value of its businesses, but a newly simplified structure and plans to shine light on the businesses in IAC’s portfolio meant that this negative stub value was especially irrational, and ultimately short lived. Over time, we expect many of the businesses within IAC to be individually worth significantly more than the entire value of IAC today.
From the initial purchase of television station holding company Silver King Communications for $250 million in 1995, Barry Diller and IAC have multiplied their investment by over 240 times. Through a proven repeatable process, IAC identifies nascent businesses exposed to the secular trend of consumers shifting their consumption patterns from offline to online, makes long term investments to remove customer pain points on the supply side and demand side of the marketplace, and drives penetration of the category to take dominant share and to grow the total addressable market. When these category leaders grow their market to the extent that they are able to stand on their own, IAC spins the businesses to shareholders and refocuses its efforts on a new series of e-commerce marketplace businesses.
We often seek situations where proven management teams act like owners and invest through the income statement via lower margins and diminished short-term profits in order to grow market share and grow the market. These situations are inevitably judged harshly by a market myopically focused on the short term, but when executed well by proven operators, these situations create opportunities for outsized shareholder returns. We believe that this dynamic is evident in several of IAC portfolio companies, and that the outcome will be no different. With any investment we make, we look for multiple ways to win. In IAC, we see eight.
First, IAC’s largest holding, ANGI Homeservices (ANGI), is significantly undervalued relative to its earnings power today and has a long runway of high return on invested capital opportunities to take market share, grow the addressable market, and compound shareholder value. ANGI is an online marketplace for home services. Initially founded as a lead generation business, ANGI is rolling out fixed price home services which will accelerate ANGI’s transformation into a platform for managing one’s home. ANGI stands to benefit in several ways.
4. Twitter, Inc. (NYSE:TWTR)
No of HFs: 75
Total Value of HF Holdings: $2.15 Billion
As of the first quarter of 2019, twitter averaged 330 million monthly active users. It is not a surprising number with the services it offers. The platform was launched in 2006, and since then it has been providing users with social networking and microblogging services. According to Statista, as of May 2020, Barack Obama’s account had the most followers with 118 million people.
But is Twitter (TWTR) a stock to buy for 2021? Carillon Eagle Mid Cap Growth Fund recently made comments where he mentioned that twitter’s user count continues to accelerate.
“Twitter’s user count continues to accelerate due to the global stay-at-home situation as well as the numerous positive changes the company has introduced on the platform in order to keep users engaged. The addition of various topics and lists along with the expansion of video have led to more users joining the platform and kept existing users more engaged. We believe the next positive development on the horizon could come from the company’s ability to increase the monetization of these users.”
3. Pinterest, Inc. (NYSE:PINS)
No of HFs: 80
Total Value of HF Holdings: $3.48 Billion
Pinterest, Inc. enables its users to share images and connect through social media. It is designed for users to save and discover information and ideas through images, videos, GIFs, etc. During the third quarter of 2020, the company reported a revenue of $443 million. An insider recently purchased 40,000 shares at around $27. The stock is up more than 151% since then.
In an article, Carillon Eagle Mid Cap Growth mentioned that PINS proved to be a strong performer in the quarter after announcing stronger than expected revenue.
“Pinterest operates a pinboard-style photo-sharing website that lets users create theme-based image collections for events, hobbies, and other personal interests. The firm proved to be a strong performer in the quarter after announcing stronger than expected revenue and user growth, especially outside the U.S. The company is beginning to see a recovery in advertiser spending from retail and consumer packaged goods companies. Additionally, it is benefitting from high engagement levels, new tools for conversion optimization, new shop-able ads, and international growth.”
In a separate article, Choice Equities Capital Management mentioned that the stock is an improving outlook for digital advertising.
“PINS – An improving outlook for digital advertising has also renewed interest in Pinterest. Equally importantly, the company appears poised to take the next steps in its natural evolution to improve on monetization efforts of its valued user base. Unlike other platforms who primarily connect people with each other, many of the things people seek Pinterest for – namely ideas and inspiration – are actually products themselves. Accordingly, the company is rolling out new features that make it easier for their users to find and buy these products. And they are rolling out other new products to continue to improve user engagement as functions like Story Pins enable users to follow multiple pages of step by step instructions for things like tutorials or various DIY projects. With a still yawning gap in the important average revenue per user (ARPU) metric versus the likes of more mature peers like Facebook, continued improvement in this area could drive meaningful profitable revenue growth for years to come.”
Pixabay/Public Domain
2. Alphabet, Inc. (NASDAQ:GOOG)
No of HFs: 162
Total Value of HF Holdings: $14.7 Billion
In 2006, Google purchased YouTube for $1.65 billion and since then has been receiving many social media hits. According to investing news, they are the second most visited site in the world with a 2 billion user count worldwide. Alphabet was mentioned in the 10 Best Stocks to Buy and Hold For 5 Years According to ARK’s Cathie Wood.
In an article, Baron Opportunity Fund mentioned the stock.
“Considering solid Fund inflows, we added to long-term holding Alphabet Inc. to maintain its weighting in the portfolio. Alphabet is the parent company of Google, the world’s largest search and online advertising company. We increased our position in Alphabet this quarter as a protracted COVID-19-related recovery in travel and brand advertising presented an attractive buying opportunity. We are encouraged by improving trends in both search and YouTube, driven by durable tailwinds to e-commerce and local advertising, as well as the continued shift of video advertising dollars away from linear television as consumers increasingly cut the cable TV cord. We believe Google is becoming slightly more disciplined in capital allocation than it has been historically. Lastly, Google Cloud, which this quarter achieved a $12 billion revenue run rate under the leadership of Thomas Kurian, is having increasing success competing with larger vendors, due to its strengths in security, open-source, and data analytics.”
1. Facebook, Inc. (NASDAQ:FB)
No of HFs: 230
Total Value of HF Holdings: $29.3 Billion
The number one best social media stock to buy now is Facebook. With over 2.45 billion monthly active Facebook users registered as of Q3 2020, the social media website has become the world’s biggest social media platform. The company allows users to connect through mobile, computer, smart devices, and alike. It enables users to share opinions, photos, and activities online. FB was mentioned as one of the Top 10 Stocks Americans Searched the Most in 2020. An insider recently purchased 154 shares at around $181. The stock is up more than 49% since then.
Wedgewood Partners mentioned in an article that continued pressure from politicians and regulators keept Facebook’s earnings multiple in check.
“Facebook reported 32% growth in constant currency ad revenue, along with expectations for 50-55% growth in expenses as the Company continued with their telegraphed plan to accelerate investments in privacy and security across their social platforms. The Federal Trade Commission (FTC) also approved a $5 billion fine for violating a 2012 FTC order by misrepresenting users’ ability to control data privacy. While this removed an overhang dating back to early 2018, continued pressure from politicians and regulators kept Facebook’s earnings multiple in check.”
Please also see 14 Best Internet of Things Stocks to Buy Now and 10 Best Data Center Stocks to Buy Now
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