This year, global social media users swelled to a record-breaking 4.9 billion . Statistics like these suggest that social media stocks may be a great investment opportunity — but what are the best social media stocks to invest in?
Social media is big business. One recent report valued the industry at a whopping $231 billion
It’s also an incredibly complex market, with countless platforms, technologies, and companies all doing their best to stay competitive in this rapidly evolving space.
This article explores how to invest in social media stocks, what social media can tell us about the broader economy, and which are the top social media stocks to watch in 2023.
What are social media stocks?
Should you invest in social media stocks?
What Social Media Stocks Tell Us About the Economy
Social Media Stocks to Watch
Should you invest in social media stocks?
While there’s no one-size-fits-all approach to investing (and never any return guarantee), many experts have suggested that social media stocks can be a solid option for today’s investors.
For example, stock market expert Josh Dylan argues that investing in social media stocks is an “attractive proposition” for two reasons.
“Firstly,” he notes, “social media usage continues to climb, creating a vast and growing market for these platforms.”
Secondly, he continues, “the digital advertising market, a key revenue stream for social media companies, is also on a growth trajectory as businesses increasingly shift marketing dollars from traditional channels to online ones.”
To be sure, social media stocks aren’t without risk.
Dylan points out that the social media sector is “subject to changing user preferences, significant regulatory scrutiny, and intense competition among platforms.”
He says, “As with any investment, potential investors should conduct thorough research and consider the risk factors unique to this dynamic and highly visible sector.”
It’s always important to be aware of the risks associated with any form of investment.
However, according to a recent research report from Market Research Future, the global social media industry is expected to continue to experience “healthy growth” over the next decade.
So, it’s worth considering investing in social media stocks as part of a diversified investment portfolio.
What Social Media Stocks Tell Us About the Economy
In a recent report from the Carnegie Institute, market experts Claudia Biancotti and Paolo Ciocca suggest that social media has become increasingly intertwined with the broader global economy.
As they explain, “Discourse on social media increasingly affects personal financial decisions…the influence of social media on financial markets is here to stay, as younger generations start saving and investing.”
In other words, as social media continues to grow, it’s likely to have more and more influence on the broader stock market.
Especially since the social media industry is particularly relevant to younger generations, this market will likely have an increasingly large effect on the global economy as younger demographics grow and gain buying power.
Indeed, studies have shown that growth in social media may correlate with broader economic growth across sectors and geographies.
One recently published study found that increased social media penetration corresponded to a boost in economic growth across 177 countries worldwide.
Conversely, analysts have reported that when one social media stock falls, it can have substantial ripple effects on other firms’ stock prices.
For example, when shares of the popular image-sharing platform Snapchat dropped substantially in 2022, Piper Sandler analyst Tom Champion suggested that the drop was reflective of broader trends, arguing that “at this point, our sense is this is more macro and industry-driven versus Snap specific.”
Clearly, social media stocks can tell us a lot about the state of the broader economy. In fact, according to the Pew Research Center, more than 80% of Americans aged 18-49 use at least one social media site.
These platforms have become a massive part of the global economy, so it’s only natural that social media stocks have become closely connected to more significant economic trends.
What are social media stocks?
Of course, to craft an effective social media investment strategy, it’s important first to understand what a social media stock is.
The social media landscape is constantly evolving, but at a high level, social media refers to any digital technology that enables users to share ideas through virtual networks and communities, whether via text, images, videos, or some combination.
Some of the most widely-used platforms today include TikTok, Snapchat, Instagram, and X (formerly Twitter) — but new platforms emerge constantly, always looking to compete with incumbents and capture new market share.
Because of its massive user base, social media is a major component of many companies’ marketing strategies.
Many firms create their own social media presence on top platforms to promote their brand and engage with existing and prospective customers through comments, reposts, and more.
Clearly, social media is a critical part of the broader tech ecosystem and global economy. As such, it’s hardly a surprise that social media stocks are now crucial to many investment strategies.
Specifically, many investors may look to social media stocks to buy shares in some of the most cutting-edge, rapidly growing companies.
Should you invest in social media stocks?
While there’s no one-size-fits-all approach to investing (and never any return guarantee), many experts have suggested that social media stocks can be a solid option for today’s investors.
For example, stock market expert Josh Dylan argues that investing in social media stocks is an “attractive proposition” for two reasons.
“Firstly,” he notes, “social media usage continues to climb, creating a vast and growing market for these platforms.”
Secondly, he continues, “the digital advertising market, a key revenue stream for social media companies, is also on a growth trajectory as businesses increasingly shift marketing dollars from traditional channels to online ones.”
To be sure, social media stocks aren’t without risk.
Dylan points out that the social media sector is “subject to changing user preferences, significant regulatory scrutiny, and intense competition among platforms.”
He says, “As with any investment, potential investors should conduct thorough research and consider the risk factors unique to this dynamic and highly visible sector.”
It’s always important to be aware of the risks associated with any form of investment.
However, according to a recent research report from Market Research Future, the global social media industry is expected to continue to experience “healthy growth” over the next decade.
So, it’s worth considering investing in social media stocks as part of a diversified investment portfolio.
