• InterActiveCorp (IAC): This deeply undervalued stock is likely to rebound.
• Snap Inc (SNAP): Robust revenue growth and a financial turnaround make it appealing.
• Twitter (TWTR): Influence from Elon Musk can drive it even higher.

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Elon Musk has recently disclosed his intention to buy Twitter (NYSE:TWTR), which has has generated considerable excitement for the stock. He has also refused to join Twitter’s board of directors, which would have limited his stake to 14.9%. Therefore, Elon’s refusal to accept that role likely means that he might plan to buy more of the stock and increase his influence on Twitter if his current offer is rejected. Thus, if Elon does buy more TWTR, it will likely trigger further rallies.

For now, Twitter is likely to face a short-term cool-down as the spike stabilizes.

Earlier this month, Elon’s disclosure of his stake in the stock sent TWTR soaring. It closed with a gain of 27%-plus on April 4, the day when Elon disclosed his stake. Before his disclosure, Twitter was facing a 57%-plus decline in value for over a year, and the share price declined from its previous close of $77 to $33. However, Twitter has now risen to $45 due to the drama.

Virtually all social media stocks have been in a long-term decline since last year. However, the recent enthusiasm regarding Twitter is likely to have a spillover effect on other social media stocks.

Thus, I have found three social media stocks to buy that are likely to gain from Elon’s actions regarding TWTR.

InterActiveCorp (IAC)

InterActiveCorp is currently one of the most undervalued social media stocks. The stock will likely have a significant rally once social media stocks turn hot.

The price of IAC has found support in the $100 range, with a market cap of $9 billion. The stock is highly undervalued, considering its annual revenue of $3.6 billion and a quarterly year-over-year growth rate of 29.5%. In addition, IAC’s 38%-plus decline since February 2021 and the recent price stabilization may indicate that the stock is bottoming out.

In addition, the net income of IAC has also shown strong growth. Last year, the company reported a 120%-plus increase in yearly net income. The net revenue more than doubled from $269 million to $597 million in a year, which is substantial for a company of this size.

Thus, I believe IAC to be a buy. The stock’s undervaluation can make it very profitable once the market returns to a bullish trajectory.

Snapchat (SNAP)

Snapchat has declined by 56%-plus since September 2021. Using conventional metrics, SNAP is undoubtedly overvalued. However, it is still likely to be profitable due to its significant long-term prospects.

Snapchat has reported revenue of $4.1 billion compared to its large market cap of nearly $56 billion. However, its high revenue growth rate of 42%-plus and a fast-growing revenue per user (ARPU) are likely reasons for its overvaluation.

Moreover, Snapchat’s daily active users of 319 million leaves a lot more room for growth, and an ARPU of just $4.06 is likely to increase and pull up its revenue along with it.

SNAP performs extraordinarily well in a bullish market compared to other social media stocks. However, it has been quite volatile in the current state of the market. Thus, I would only buy significant amounts of Snapchat once there are clear signs of an extended bull market. Nonetheless, buying Snapchat now can still be relatively profitable in the long term.

Twitter (TWTR)

Twitter is currently under a lot of attention due to the drama surrounding Elon. However, it is still unclear whether Elon’s proposal to buy the company will be accepted.

Even if his offer is rejected, if Elon dedicates himself to increasing his stake to influence Twitter or even acquire the company, it will significantly affect the stock’s price. After all, Elon’s net worth is several times more than the $36 billion market cap of Twitter, and it is certainly feasible for Elon to do just about whatever he wants with the stock.

However, even without Elon Musk, TWTR stock is still a buy. The company has a high revenue growth rate of 21.5% as of last quarter and reported a $5 billion revenue last year. If Twitter can sustain this revenue growth, it is also likely to be profitable in the near future. Thus, I believe TWTR can be a worthwhile long-term asset.

On the date of publication, Omor Ibne Ehsan did not have (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.