Have you heard the current debates surrounding TikTok and X? It’s easy to see the huge influence that social media exerts on society.
True, much commentary and debate centers around content and the potential ill effects of the technology. From an monetary perspective, social media sites are highly profitable investments that continue to be run by successful companies. Advertising on social media sites is forecast to reach just under $220 billion in 2024, according to data from Statista.
And, marketing will get a boost later this year due to political ads prompted by the upcoming presidential election. Those ads are forecast to rise by 30% from 2020 levels and reach $12.32 billion this year. And, 28% of that money, or $3.45 billion, is being allocated to online ads.
Furthermore, American social media companies could get a boost should Congress ban Chinese social media app TikTok nationwide. TikTok is arguably the world’s most popular social media site, boasting 1.7 billion users globally. Let’s dive into three strong buy social media stocks to add to your Q2 must-watch list.
Reddit (RDDT)
It’s difficult to talk about social media stocks right now and not mention the elephant in the room. That would be Reddit (NYSE:RDDT).
Of course, the company is not without risks. RDDT is unprofitable with its shares showing signs of volatility. It’s down 9% on the day that this is being written. However, by most accounts, the company’s initial public offering (IPO) has been a success. Shares are trading 74% above their initial price of $34.
Moving forward, achieving profitability will be key for Reddit and any future gains in the stock. For now though, investors seem focused on the company’s growth, which remains strong. Reddit claims to have 73 million daily active users on its platform, and growing. Those user numbers will help to drive advertising on the platform, which is Reddit’s main source of revenue.
More broadly, the RDDT IPO demonstrates a renewed appetite for new listings among investors, especially from big technology concerns.
Meta Platforms (META)
Truly, Meta Platforms‘ (NASDAQ:META) gains attention for its artificial intelligence (AI) offerings and virtual reality headsets. Yet, the bread and butter still comes from its social media platforms that include Facebook, Instagram and WhatsApp. META is up 42% on the year because of user growth and advertising sites gaining traction in recent quarters.
Additionally, the company’s revenue rose 25% in the fourth quarter of 2023 from a year earlier. This was the fastest rate of growth since mid-2021, as the online advertising market recovers from its post-Covid-19 hangover. Going forward, Meta Platforms stock could get a boost should the U.S. ban of Chinese social media app TikTok.
Meta’s short-video platform Reels is waiting in the wings should TikTok be banned from devices across the U.S. Advertising revenue on Reels has been growing over the last six months and could get a huge boost should Americans need to find an alternative for their TikTok fix.
Pinterest (PINS)
Pinterest (NYSE:PINS) has been on the comeback trail over the last year. The stock has gained 24% over the past 12 months as it demonstrates gradual improvement in its finances.
And, it has taken steps to adjust its business following the end of the pandemic as people emerged from Covid-19 hibernation. In February of this year, Pinterest reported that monthly active users on its social media site rose 11% in Q4 2023 to 498 million, topping Wall Street forecasts of 487 million.
Looking ahead, Pinterest forecasts revenue of $690 million to $705 million for the current first quarter of 2024, which represents annualized growth of 15% to 17%. Also, the company announced a new partnership with Google parent company Alphabet (NASDAQ:GOOG/GOOGL). It aims to focus on third-party online advertisements, providing a potential revenue boost to Pinterest. Now, PINS stock is up 42% since its 2019 IPO.
On the date of publication, Joel Baglole held a long position in GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.