While social media stocks soared during the pandemic, a drop off in advertising revenue and shifting consumer habits led to steep losses, post-COVID. So, in an effort to recoup lost ground, many are embracing newer technologies, such as the metaverse, including these seven stocks.
| META | Meta Platforms | $240.58 |
| SNAP | Snap | $10.60 |
| ETSY | Etsy | $101.00 |
| MTCH | Match Group | $35.01 |
| PINS | $27.55 | |
| BMBL | Bumble | $17.56 |
| BILI | Bilibili | $20.02 |
Meta Platforms (META)
We’ll start with the most obvious company, Meta Platforms (NASDAQ:META). After all, which social media platform is likely to benefit more from integration with the metaverse than Facebook, whose parent company, Meta Platforms, is literally creating the virtual world. Facebook could use a refresh. One of the original and oldest social media companies still in existence, Facebook is no longer new or exciting. Consequently, its user base has gotten older as young people migrate to other social media outlets.
Facebook’s reputation has also taken a hit from accusations of rampant misinformation and fake accounts on its platform. That said, Facebook remains a formidable player in the social media space with just under three billion monthly active users at the end of 2022. That massive user base enables Facebook to attract considerable online advertising dollars. Even with a downturn last year, Facebook still attracted nearly $115 billion in online ad revenue. New bells and whistles via the metaverse could give the business a boost.
META stock has gained 74% so far this year after enduring a big selloff in 2022.
Snap (SNAP)
Snap (NYSE:SNAP) is another social media company that could be given a leg up by the metaverse. The company behind Snapchat and Bitmoji has struggled over the last year as a sector-wide decline in online advertising hurt its bottom line. Poor financial results and missed earnings expectations have pushed SNAP stock down 67% over the past 12 months. However, like a lot of tech and social media concerns, Snap’s share price has been recovering and has risen 27% this year.
To its credit, Snap is working hard to diversify and adopt new technologies. This includes integrating a new in-app chatbot powered by the same artificial intelligence (AI) technology as ChatGPT. The company is rolling out a digital personal assistant on its platform called “My AI.” Snap is also experimenting with augmented reality technology. And, Snap has been given a lift by government threats to ban the Chinese social media app TikTok, which is a chief rival of Snap in the U.S. market.
Etsy (ETSY)
Etsy (NASDAQ:ETSY) is both an e-commerce and social media platform. The company facilitates online sales by creating a space where creators selling vintage and handmade goods can connect directly with shoppers looking to make a purchase. Today, more than 7.5 million sellers and 96 million buyers meet and interact on Etsy each month, making it one of the biggest social media platforms in the world. Also dependent on online ad revenue that has dried up, ETSY stock has declined 11% in the past year.
Like the other social media concerns on this list, Etsy is working overtime to diversify and improve the experience on its platform through the integration of new technologies and offerings. Etsy now owns the vintage music equipment and reseller site called “Reverb,” as well as “Depop,” a used-apparel marketplace that has tens of millions of users globally. Using the metaverse to enhance its user experience further could help Etsy with its future growth.
Match Group (MTCH)
Match Group (NASDAQ:MTCH) is a social media company focused on online dating. The company is probably best known as the owner of Tinder, the top dating app in the world with more than 75 million monthly users. Match Group also owns dating apps and websites such as OkCupid, Hinge, which is popular with younger adults, and OurTime, a dating app for older people and seniors. Taken together, Match Group’s online dating apps generate more than $2 billion in annual revenue.
While online dating exploded during the pandemic, the industry has been in retreat over the past year. It too has suffered from a pullback in online ad spending. As a result, Match Group has reported disappointing earnings and subdued forward guidance. This has pushed MTCH stock down 63% in the last 12 months, including a 14% decrease so far this year. On the plus side, Match Group’s stock has declined so much that it has attracted analyst upgrades. Barclays (NYSE:BCS) recently lifted its rating on Match, saying it is now a “value stock.”
Pinterest (PINS)
Pinterest (NYSE:PINS) is a social media company that enables people to share images, videos, and animated GIFs. The company rose to prominence during the Covid-19 pandemic as millions of people sheltering in place at home used the platform to communicate and share details of their lives with family, friends, and complete strangers. Now boasting more than 450 million monthly users, Pinterest has grown to become a top site for businesses and creators to advertise on. This explains why PINS stock is up 25% in the last year.
Pinterest is always on the lookout for ways to improve its user experience and keep people engaged with its site. The metaverse could be the next big thing for this visual-oriented social media site. PINS stock has been gaining ever since the company turned profitable in late 2021 and is now generating positive free cash flow. As with other social media companies, PINS stock has attracted analyst upgrades in recent months, with UBS (NYSE:UBS) upgrading the shares to “buy” from “hold,” citing improving advertising trends.
Bumble (BMBL)
Another online dating company, Bumble (NASDAQ:BMBL) was created by a former executive at Match Group’s Tinder. With more than 40 million monthly users, Bumble today is the second most popular dating app in the U.S. after Tinder. The company went public in February 2021 just as the market was peaking and turning south. Since then, Bumble has struggled along with the entire social media sector. BMBL stock has slid 35% over the last year.
Bumble’s basic online dating service is free. The company generates revenue from online ads, as well as in-app purchases and premium subscriptions that it pushes users towards. The company’s earnings suggest that it is making strides when it comes to growth. In 2022, Bumble’s revenue grew an annualized 31% to $694 million. Since 2019, the company’s revenue has increased by more than 2.5 times. Layering in more creative approaches to online dating, perhaps through the metaverse, could help to sustain its impressive growth rate.
Bilibili (BILI)
Bilibili (NASDAQ:BILI) is a Chinese social media platform where users can submit videos and add overlay commentary on them. The company has also incorporated comic books, games, and animation into its site. It’s a format that has proven extremely popular both within China and abroad. Today, Bilibili has more than 325 million monthly users, the majority of them members of Generation Z that are coveted by advertisers. Listed on the Nasdaq exchange in the U.S., BILI stock has gained 91% in the past six months.
Frequently referred to as the “YouTube of China,” Bilibili continues to grow through new products and offerings. It is now in the process of expanding an e-commerce site on its platform. It also generates revenue from mobile gaming and virtual gifts that users can purchase online. While Bilibili remains unprofitable, it continues to grow at a brisk pace, forecasting revenue growth of 10% to 19% in 2023. The metaverse could fit seamlessly into many of Bilibili’s products, making it a social media company that could definitely benefit from the virtual realm.
On the date of publication, Joel Baglole 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.
