It should be pretty obvious that now more then ever we need to be connected. Last weekend Microsoft(MSFT) announced that they could potentially acquire Tik Tok, a “new” social media app for the younger crowd. Do they really need to do that though? They already own Linkedin which is a much more professional and “older” form of social media that is pretty much the opposite of Tik Tok. It would basically be like Facebook(FB) buying out Instagram(for $1 Billion) which I didn’t really think it made sense but it also targets more of the younger crowd like Tik Tok. Facebook also bought out Whatsapp for $19 Billion in cash and stock. Its pretty easy to say that Facebook is a social media powerhouse.
With the recent pull in ads that big companies are doing from facebook basically means that they are looking elsewhere. Reddit, Twitter(TWTR), Pinterest(PINS), Snapchat(SNAP) and Linkedin have all taken advantage of everyone jumping ship from Facebook but does it really matter at this point? Not really, in the last 3 months Facebook is up almost 29% and still rising. Companies are still advertising on facebook and I think that Mark’s last appearance telling everyone how it really is and “finger pointing” did them a favor if anything. Much like Twitter really censoring Mr. Trump lately has brought in alot more subscribers and followers to their platform. But is that the type of censorship that is going to hurt them long term if people aren’t censored on other platforms?
I feel that there is no lack of competition in the social media sector. Not only is there just regular consumer use programs and apps but on a professional or company side you also have Zoom(ZM) who’s share price is up almost 200% in the last year. I would also like to lump in Skype with Zoom but Microsoft(who owns skype) is pivoting from Skype and starting to introduce Teams which is basically set up for full company use from video chats to work DM and group DM. I’m not trying to make this article all about Microsoft but its really hard to not mention them since they pretty much have their hands in everything that has to do with any type of technology. I will honestly say it right now, I think that they are a great investment haha.
With all of these social media platforms and all the competition that is out there right now how do you know who to invest in for the future? I personally feel that Twitter and pinterest are somewhat too 1 dimensional. They are both more just sources for information and the more serious side of social media. Then you have Facebook who is in a whole world of their own. They have the video messaging, their own DM platform, facebook games, marketplace, facebook ads and so much more. There is no wonder why they are always in everyone’s sights, its because they are the biggest(over 2 billion users). I truly wish I would have jumped on the Facebook band wagon and bought shares a long time ago. Lets talk about some numbers now.
Microsoft(MSFT)-$212.48USD/share, $1.6 Trillion Market Cap, 5.7 EPS, 33.1 P/E(forward), Dividend Yield of 0.96%($2.04/share) and 35% Dividend Payout Ratio(12 months trailing).
Facebook(FB)-$268.44USD/share, $748.9 Billion Market Cap, 7.84 EPS, 33.1 P/E(forward), Dividend Yield of 0%.
Snapchat(SNAP)-$21.58USD/share, $31.9 Billion Market Cap, -0.77 EPS, N/A P/E, Dividend Yield of 0%.
Twitter(TWTR)-$37.14USD/share, $29.8 Billion Market Cap, -1.56 EPS, N/A P/E, Dividend Yield of 0%.
Pinterest(PINS)-$34.98USD/share, $21.7 Billion Market Cap, -0.69 EPS, N/A P/E, Dividend Yield of 0%.
The main reason you can see why I talk about Microsoft and Facebook so much is because they are such power house companies. Microsoft is the only one out of all of these companies that pays a dividend, they have also been around for about 45 years longer than the other 4 haha. Facebook however has been around for about 16 years and has really come along way especially since going public in 2012. Twitter actually followed Facebook and went public in 2013 and they have been around since 2006 which is only 2 years less then facebook. I feel that Twitter is probably the most political of all these social media sites and haven’t really started to try to expand their platform to far from just posting a tweet.
Pinterest and Snapchat probably have the farthest to go out of everyone. Pinterest has been around for 10 years and Snapchat has been around for only 9 years. Pinterest has only actually gone public last year and they are currently up almost 90% since going public which is pretty good. Snapchat on the other hand has not done as well. They have had more downs then ups and have had lots of copy cat features stolen by Instagram and other platforms. They are down 11% since going public and aren’t overly diverse. They mostly are only directed toward the younger generation as well(I don’t have Snapchat so I guess that makes me old haha).
In these tough times of social distancing and self isolation people are leaning more and more on social media. Any of these companies would be a good investment(not to sure about snapchat yet though) and even 2 of them would make great investments. I expect social media use to continue to rise exponentially in the near future and we might even see more competition come out because there seems to be a new platform every year. So whats next you say? I have no idea but I know that i’m keeping my eyes open because who knows, maybe someone will even buy snapchat and it will become a platform with more to offer. For now just make sure you keep your eyes on this sector as its destined for big things.
That is all for today and remember everyone, invest in yourself first.
*Disclaimer, all share prices are after market close as of today August 7, 2020.