The creation of social media has completely changed the way people live. People can text, call, and even Facetime friends and families from the other side of the world within a second. The power of social media apps is growing by the day. As a result, social media stocks are now some of the best stocks you can buy.
The world is growing interconnected rapidly as internet and social media technology advances, and social media has made it much more convenient to explore traditional in-person things like making new friends and dating.
However, experts are cautioning people on how dangerous it is to be so connected to social media. Specifically, a lot of new social media applications are targeted toward the younger generation, and some even find ways to manipulate their search engine and their algorithm to keep their users lured in by providing excessive amounts of dopamine. Thus, it is extremely important for users to study and understand the risks associated with each online social media platform. Below are the three worst social media stocks, and investors should get their money from these by 2025.
Weibo (WB)
Weibo (NASDAQ:WB) is one of the largest social media companies in China. With a microblogging platform, it allows users to make posts, tag, or interact with other users through the comment section. It is often compared to X due to similar features. As of the first quarter of 2024, Weibo has around 255 million active daily users.
Year over year, the stock fell 45.63%. For the past seven consecutive quarters, Weibo delivered negative top-line growth. Despite a continuous increase in monthly users, Weibo has not been successful in translating its large user base into a profitable business for a prolonged period. This should be a serious red flag for investors as it reveals Weibo’s incapability to deliver solid financial returns.
To make things worse, Weibo has been seeing declining ad revenues, which indicates that its growing user base might hit a plateau soon. Before it is too late and Weibo stock goes down even more, investors should sell their positions quickly. If you are looking for the top social media stocks, start here.
Match Group (MTCH)
Match Group (NASDAQ:MTCH) owns major dating applications such as Tinder, Hinge, Plenty of Fish, Match.com, and many others. While it has gained popularity and recognition as the world’s first online dating app, as the competition in the dating app market gets fierce, the company will face challenges.
One of the major challenges is increasing free online dating applications, which weakens the competitiveness of traditional powerhouses like Tinder and Hinge. Additionally, the dating app world is getting more niche by the day. There are dating apps that are targeted towards specific groups of people such as Coffee Meets Bagel.
Furthermore, the overall demand for paid online dating apps and services is declining due to people’s changing preferences. In fact, the average revenue per user has been declining since 2017 as the number of non-paying users has been increasing. Before this continuing trend worsens Match Group’s financial returns, investors should sell the stock.
Snap (SNAP)
Snap (NYSE:SNAP) is an American social media company that provides an interactive platform that allows users to interact with each other by using its signature camera feature.
Compared to its peak in 2021, the stock is down 80% at $14.33, and even since the beginning of the year, it is down more than 10%. Yet, there are still red flags that signal a steeper decline.
At the surface value, Snap might appear like a good investment opportunity. In the first quarter of 2024, Snap reported a revenue of 1.195 billion, an increase of 21% year over year. Yet, this was a heavy miss compared to $1.36 billion that Wall Street was expecting. Furthermore, Snap experienced a marginal 5% growth in digital ad revenue when its competitors like Meta (NASDAQ:META) and Google (NASDAQ:GOOG) recorded a double-digit growth. The success story of Snap during COVID-19 is in the past, and investors should get rid of their hopes. This is easily one of the top social media stocks to buy.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, Andy Kim 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.
