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3 Stocks to Gain From the Unabated Popularity of Social Media

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Social media has become one of the most popular online engagement platforms across the world thanks to the outbreak of coronavirus last year. When people were compelled to stay at home and practice social distancing, social media allowed them to stay in touch with each other virtually.

Social media has emerged as an entertainment hub as well. As people searched for at-home forms of entertainment with movie theatres and restaurants being shut, several celebrities and artists decided to engage with fans by live streaming on social media platforms. These platforms have introduced short videos or images, which disappear after a set period of time. This form of content has become widely popular among users, owing to its short duration.

Other factors like the rising availability of the Internet and smartphones across the world have also boosted social media adoption. A report by Hootsuite published on Jul 22 stated that in July 2021, social media users increased more than 13% year over year, with the rise of more than half a billion users in 12 months. The report further stated that as of July, there were 4.48 billion social media users worldwide, equivalent to about 57% of the world’s population.

It is no surprise that social media has also become one of the most popular platforms for digital advertising — a major source of revenues for the social media companies. Firms can reach out to relevant users as they can choose their audience. Reaching out to the right audience means that users will be more interested in what the firm has to offer, thereby increasing the chances of generating sales. It’s also interesting to note that owing to the popularity of short videos on social media, several firms are utilizing them to engage with users. Firms also have analytics tools at their disposal to measure the success of their advertisement campaigns. Moreover, these conveniences are offered to firms at a comparatively lesser cost than the traditional advertising methods.

Reflective of the myriad conveniences that both users and firms are enjoying on social media, it is no surprise that the market is expected to grow further. Per a report by the Business Research Company, the social media market is estimated to witness a CAGR of 8.2% in 2021 and 32% by 2025.

3 Social Media Stocks to Watch Out For

Social media remains one of the most favored ways of connecting with people. Firms are also using social media for advertising their products and services to appropriate people, thereby boosting profitability. This seems then a prudent time to take a look at social media names that should continue to thrive going forward. We have selected three such stocks that carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Facebook, Inc. FB is one of the most popular social media platforms and the company is benefiting from increased mobile advertisement revenues. In second-quarter 2021, Facebook’s number of monthly active users increased 7.2% year over year. On Jun 22, Facebook announced that it is expanding its Shops feature to WhatsApp and Facebook Marketplace.

Shares of Facebook have risen 31.2% year to date and it currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased nearly 7% over the past 60 days. The company’s expected earnings growth rate for the current year is 39.7%.

Twitter, Inc. TWTR offers a platform that allows users to consume, create, distribute and discover content. In the second quarter of 2021, the company’s advertising revenues grew 87% year over year. The company is also focusing on livestreaming and on Jan 25, a multi-year deal between NBCUniversal and Twitter was announced with NBCUniversal bringing live content like Golden Globes, and others to Twitter.

Shares of this Zacks Rank #3 company have risen 16.1% year to date. The Zacks Consensus Estimate for its current-year earnings increased 17.3% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.

Snap Inc. SNAP offers Snapchat, a camera application with functionalities, such as Camera, Communication, Snap Map, Stories, and Spotlight that enable people to communicate through short videos and images. On Jun 24, Universal Music Group and Snap announced that they have signed a multifaceted global agreement, allowing Snapchat users to incorporate Universal’s “catalog of recorded music and content into creative tools.”

Shares of Snap have risen 43.4% year to date. The Zacks Consensus Estimate for its current-year earnings increased 47.8% over the past 60 days. The Zacks Rank #3 company’s expected earnings growth rate for the current year is more than 100%.


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