Social media isn’t just the rage for the younger generation to communicate and for the older generation to stay in touch. Social media has become the way for advertisers to reach potential clients. And as a result, social media stocks are hot.
This is because money is flowing into these businesses as advertisers want to place more and more ads aimed at their demographic. And this makes sense.
Why pay to advertise on television or in a magazine when you only have a few points on the demographic. With social media, you have many points and can narrow down specifically to who you want to target.
But even though money is flowing into social media stocks, not all are going to be worth your investment dollars. Here are the 3 big players and which ones you should invest in.
Which Social Media Stocks Should You Invest In?
#1. Snap (NASDAQ: SNAP)
I previously wrote about Snap and how I felt that Facebook was killing them slowly. I still feel this way even though the recent earnings of Snap make some investors think differently.
The truth is, they had a great quarter. But you need to determine if they can keep it up. For the short term, they might be able to, but I still feel that Facebook does the same thing better and will eventually put Snap out of business.
In other words, I would avoid this stock. But if you want to gamble on some short term growth, you could consider this one. Just be certain to place a stop loss orders to protect any gains you might experience.
#2. Twitter (NASDAQ: TWTR)
Twitter had been an also-ran for a few years after the stock went public. At first, investors jumped on the hype of social media, thinking investing in these companies would produce instant riches. But they quickly learned that is far from the truth.
But things are changing with this stock. User engagement is up, advertising is up and so is earnings. As a result, investors are looking at this stock in a new light.
Only time will tell if Twitter can continue to deliver but I would be a buyer in this stock if the price pulls back just a bit. For me, the risk is worth the potential return.
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#3. Facebook (NASDAQ: FB)
Facebook stock has pulled back from its long run up and now is a great time to get in on this stock. I love Facebook. They are innovating social media and as a result, are making a lot of money in the process. Stock picking services such as Motley Fool Stock Advisor often recommend Facebook.
With their recent announcement of how users’ news feeds will show, businesses have to pay to play. In other words, in order for businesses to get their posts in front of their target audience, they are going to have to pay.
This is a win for users, whose news feeds will no longer be dominated by ads. It’s a win for businesses as they can get their message to exactly who they want. And it’s a win for Facebook in terms of happier customers and higher revenues.
Hands down, Facebook is the stock on this list to buy first.
In all, social media stocks are just like any other industry, you have your leaders and laggards. Facebook is clearly the leader at this point and there are no signs suggesting that they will be slowing down.
Twitter is finally working on living up to the hype investors expected when it debuted. This makes it a stock worthy to invest in too.
And Snap is still trying to figure things out. You could be an investor in this company, but for me, I still don’t see the allure of this one. Everything it offers, Facebook does better.
This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.