3 Social Media Stocks Trading Below Their Worth


  • Social media stocks have a unique opportunity to leverage generative AI to produce huge fundamental improvements.
  • Meta Platforms (META): The massive rally may not be over as Meta’s AI talents get better over time.
  • Snap (SNAP): AI innovation is key as the firm looks to better monetize its user base.
  • Pinterest (PINS): Plenty of growth drivers could be brought to center stage as the firm embraces AI.
undervalued social media stocks - 3 Social Media Stocks Trading Below Their Worth

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Many top social media stocks seem to be making the most of the rise of artificial intelligence (AI). Undoubtedly, AI is a powerful technology that can drive growth, value and even efficiency across any enterprise (or individual) that harnesses it effectively. For social media companies, which have massive treasure troves of user data, I view a significant opportunity to gain ground on the back of AI technologies. That’s true whether it’s used to maximize the effectiveness of targeted ads or to serve up content to maximize user engagement.

It’s not just the AI opportunity that makes social media stocks one of the more intriguing corners of the tech scene right now. The rise of the metaverse could also be a major boon as 2D content goes 3D and uptake for spatial computers, headsets and other devices rise steadily over the next five years.

Here are three impressive and undervalued social media stocks that I think have long-term growth prospects.

Meta Platforms (META)

In this photo illustration the Meta logo seen displayed on a smartphone and in the background the Facebook logo
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No surprises here. Meta Platforms (NASDAQ:META) takes the top spot for social media stocks likely trading well below its potential worth. Its CEO, Mark Zuckerberg, has proved his critics dead wrong, harnessing the power of AI in a way that few industry rivals could.

The result? A generational rally in the stock off its 2022 lows. The stock is now up more than 450% from its November 2022 depths and is well above its September 2021 peak that preceded a nasty 76% peak-to-trough decline.

As the company continues to improve its large language model capabilities, while also finding ways to maximize value from new AI innovations, META stock is not a company I would dare short-sell, even as it leaves some of its Magnificent Seven rivals behind.

With the Quest headset and metaverse wild card to also look forward over the coming 10 years, perhaps the 35.3 times trailing price-to-earnings screams value, not froth.

Snap (SNAP)

The Snapchat (SNAP) and Instagram apps on displayed on an iPhone, which sits on a gray background.
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Snap (NASDAQ:SNAP) has had no luck bouncing back from its own meltdown, which saw shares crumble around 90% from peak to trough. Undoubtedly, Snap is no Meta. But it doesn’t have to be to engineer some sort of sustained rally, at least in my humble opinion.

The company is innovating on the generative AI front with intriguing new AI tools to help keep its mostly younger users entertained. From funny augmented-reality (AR) filters to AI-powered chatbots right in the Snapchat app, the company is covering as many bases as it can. Thus far, there haven’t been many signs of any such efforts powering the share price higher. Perhaps Snap needs to be more deliberate about how it chooses to invest in such emerging technologies.

Either way, I think Snap has much to learn from Meta as it looks to level up its intriguing tech-driven monetization. Perhaps Snap’s new sponsored AR filters could offer a glimpse into the future of ads in the mixed-reality age.

Pinterest (PINS)

Pinterest, Inc. (PINS) logo
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Pinterest (NASDAQ:PINS) stock, which also imploded like a paper bag back in 2021 (and part of 2022), is starting to pick up momentum again. Though it’s still far off (around 58%) from its all-time highs, I’d argue that at this trajectory, new highs over the next few years may not be so unrealistic — not while the company experiments with intriguing new ways to serve ads.

After pulling back after a recent quarterly disappointment, shares are now down 3% year to date. I view the dip as more of a buying opportunity than a sell signal, as the firm looks to benefit from AI technologies to offer its unique take on content personalization.

At 28.1 times forward price-to-earnings (P/E), PINS stock stands out as one of the cheaper social media stocks out there. Though its recent rally faced a setback, I wouldn’t look for shares to reverse course as the firm continues investing heavily in intriguing AI and ad efforts.

On the date of publication, Joey Frenette 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.

Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.

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