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Social media has become a ubiquitous and powerful force in modern society. Nearly 5 billion global users now spend an average of two and a half hours daily on social media platforms. These platforms increasingly integrate into our daily lives, giving investors ample chances to buy social media stocks and participate in their growth. With different paths forward in the social space, we examine two of the best social media stocks that may warrant consideration amid the massive yet evolving opportunity in the space.
Meta Platforms, Inc. (META)
Meta Platforms, Inc. is the biggest and most popular social media company in the world and is widely considered the pioneer of the current state of social media. The company, formerly known as Facebook, develops products enabling people to connect through mobile devices, personal computers, virtual reality headsets, and wearables. Meta Platforms operates in two business segments: Family of Apps and Reality Labs.
The Family of Apps segment includes Facebook for sharing and discussing interests, Instagram for sharing multimedia content, Messenger for messaging across platforms, and WhatsApp for private messaging. The Reality Labs segment produces augmented and virtual reality hardware, software, and content aimed at making people feel connected.
Meta's third-quarter results were exceptionally positive across its key financial metrics. Revenue grew 23% year-over-year to $34.15 billion. Net income also increased 163.55% to $11.6 billion. Quarterly EPS beat the consensus, coming in at $4.39, a 21.27% surprise above consensus estimates. Additionally, analysts anticipate that stock prices will grow further with their Strong Buy consensus rating.
Is now the time to buy META?
META reached a new 52-week high of $361.90 at the end of 2023. Investors took advantage of the price action and secured profits. However, the stock still hovers above its 20-day (yellow) and 50-day (red line) moving averages. RSI is at 55.89, suggesting a balance between buyers and sellers. Additionally, prices are near to but above the previously established support level at $343, giving investors a chance to buy before the next surge.
Match Group Inc. (MTCH)
Match Group, Inc. delivers digital technologies and products focusing on social connections. The brand lineup includes Tinder, Hinge, Match, Meetic, OkCupid, Pairs, Plenty Of Fish, Azar, Hakuna, and other platforms tailored for users seeking connections. Its most well-known product, Tinder, is currently the world’s most popular dating app. While primarily targeted towards younger users (about half of the users are aged 18 to 24 years old), the app is increasingly becoming popular with older demographic groups.
Its other platforms and services offer specialized dating and connection services. Pairs specializes in online dating services in Japan, extending its reach to Taiwan and South Korea. Hakuna Live is an interactive social app facilitating one-to-many live streaming experiences. Azar offers a one-to-one video chat service with real-time language translations, enabling users to connect and interact globally in their native languages. The League, catering to career-oriented individuals, mandates users to apply and gain acceptance before accessing the dating platform.
What makes MTCH stand out from the rest of the social media platforms is its subscription-based revenue model. The company still offers advertising (labeled as “indirect revenue” in presentations and filings), but most of its top-line numbers come from subscribers.
While on the topic, Match Group’s latest quarterly report shows a 21% increase in average subscriber spending (or revenue per payer) YoY. Tinder saw an 11% jump in revenue, while the rest of the platforms came in at a strong 7% growth. The company did report a slight 5% dip in paying subscribers, but total revenue and net income still saw a 9% and 27% growth, respectively. Analyst consensus indicates that the experts are moderately optimistic about MTCH.
MTCH technical indicators
Prices have recovered since gapping down in October 2023. MTCH is currently forming an ascending channel, supported by increased volume. RSI is in the 60 range, still below overbought territory but confirming the strong upward momentum. Investors looking to buy into MTCH at ideal prices might want to do so near the lower channel after a confirmed bounce upward. Otherwise, they can buy in when prices breach $37, the next previously established support.
Final Thoughts
The social media segment is still poised for massive growth in the coming years. Its undeniable ubiquity and effective growth strategies and innovations make it a viable, attractive choice for growth investors.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
