An average American spends about 2 hours and 23 minutes daily on social media apps. While it has its positives and negatives, we must look at the bigger picture and understand the role of social media in our lives. Given the current times, it is impossible to live without social media, and we have at least one app installed on our phones. Investors know that social media has become a big part of our lives and is here to stay. If you want to make the most of it, invest in top social media stocks.
They will show steady growth over the next five years, and if you buy the stock at a discount, you can take home bigger gains. Even if we assume that a user accesses only two apps per day, with billions of users, it is a lot of money for the social media giants. I’ve identified three social media companies that are the talk of the town right now, and they are set to continue their rally. Let’s take a look at them.
Meta Platforms (META)
Call it an artificial intelligence (AI) push or an improvement in the economy, which has led to higher ad revenue. Meta Platforms (NASDAQ:META) has been on a rally since the beginning of the year and isn’t done yet.
Up 45% year-to-date and 86% in the past 12 months, META stock is exchanging hands for $504, which could keep roaring higher. Yes, the company has been under regulatory scrutiny and has had to pay fines in the past, but this has not stopped its growth. It has faced many adversities but has bounced back. How?
The company’s fundamentals show that there could be more momentum coming. It makes most of its money from advertising revenue and has billions of users accessing its apps. Meta could soon become a social media powerhouse with the family of apps it owns.
In the recent quarter, its daily active users jumped 7% year-over-year to hit 3.24 billion. This growth attracts marketers who want to capture this user base. In the first quarter, the company’s ad volume jumped 20% year over year, and its price per ad increased by 6%.
With a rise in digital advertising, Meta is set to benefit. Analysts expect healthy revenue growth from the company throughout the year, and this world-class business has a long way to go. The stock could outperform the market in the long term.
Spotify (SPOT)
One of the best social media stocks to own right now, Spotify (NYSE:SPOT), is a hot stock to buy and hold for the next five years. The global audio streaming giant has more than 239 million global users and is known as a dominant industry player.
The company’s growth story has been phenomenal, and it offers a free, ad-supported model and premium subscriptions. It recently hiked the premium subscription plans, and Wall Street believes that consumers will absorb this price hike, which only means good news for investors.
Fundamentally, Spotify is in an excellent place. In the first quarter, the company saw a 20% YOY jump in revenue to 3.6 billion Euros, and the EPS soared 184% YOY to 97 cents per share.
Spotify’s management is focusing on growing profitability this year. It has enough cash flow to keep investing in the business, and it ended the quarter with a cash balance of 4.7 billion euros. Spotify has also introduced a basic, low-priced plan in the U.S.
Trading at $313, SPOT stock is up 66% YTD and 95% in the past 12 months. There is no stopping Spotify’s rally, and investors who own the stock need to hold it tight. Spotify’s ambitious plans of growing the content library and improving user experience through personalized recommendations sets it apart from the other players in the industry.
Pinterest (PINS)
Pinterest (NYSE:PINS) became a hot social media app during the pandemic when we sought ways to decorate our homes or bake bread. The stock soared as high as $85 in 2021 but has dropped since then.
When the pandemic subsided, we had to get back to our routines, which led to a drop in the amount of time spent on the app. However, Pinterest is regaining lost ground, up 58% in the past 12 months and 18% YTD. It is exchanging hands for $43 and is close to the 52-week high.
The company has invested in AI to enhance content recommendations, which will benefit it in the long term. It is also working on building the next generation of machine learning technologies, and the more tech improvements it makes, the higher the revenue will grow.
In the first quarter, it reported a revenue of $740 million, up 23% YOY, and it is seeing revenue growth from partnerships with the top e-commerce companies, including Amazon (NASDAQ:AMZN). It enjoys positive cash flow, which allows it the flexibility to invest in business growth.
The image-focused platform could gain popularity in the coming years. While it is up 18% this year, it is still down from the highs of 2021. This means there is a lot of room to run.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
