The Social Media Shuffle: 3 Stocks to Watch in Truth Social’s Wake

Stocks to buy

Former president Donald Trump’s social media platform Truth Social (NASDAQ:DJT) gained significant attention last week. However, other social media stocks saw price increases, too. There is debate whether the broader rise in social media stocks boosted Truth Social or if the focus on the new microblogging site drove greater interest. Recently listed Reddit (NYSE:RDDT) also experienced gains and has continued moving higher with peers.

The increased focus raises a logical question — whether an investment opportunity exists within social media stocks. Truth Social and Reddit may experience more volatile performance as newcomers before releasing initial earnings reports. In the interim, several social media stocks that have been publicly traded for longer could offer opportunities.

Ongoing legislative considerations regarding a potential ban on TikTok are adding complexity to the social media landscape. U.S. regulators have requested it divest from its parent company, ByteDance. Extensive speculation surrounds possible outcomes: which social media company may benefit from users should the app be prohibited, who would acquire TikTok, and whether it would be another industry competitor if divested.​

Meta Platforms (META)

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Meta Platforms (NASDAQ:META) is the first pick in the social media stocks shuffle. It is the largest publicly traded social media company, with a market capitalization exceeding $1 trillion. News outlets have recently highlighted the company as one of the so-called “Magnificent Seven” stocks and for its advancements in artificial intelligence (AI). Growing interest in the metaverse provides additional context for the company’s long-term prospects.

Meta also owns Instagram, which is TikTok’s direct competitor. It will likely benefit the most if the Chinese-owned video-sharing app is excluded from the United States market. TikTok generated an estimated $16 billion in revenue in the U.S. last year. A ban on TikTok could divert billions in revenues towards META. Even if a ban does not occur, ongoing developments surrounding TikTok could enable META to increase its market share.​

Pinterest (PINS)

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Pinterest (NYSE:PINS), the image-sharing and social media platform, saw its stock price increase last week. However, shares remain in negative territory year to date (YTD). Last year, Pinterest increased its user base by 11%. Additionally, the company substantially reduced losses through cost-reduction initiatives. Its average revenue per user (ARPU), a key performance indicator, rose 1.2%, demonstrating its ability to maintain monetization.

Analysts believe the company is well-positioned to strengthen its financial performance. Consensus price target for the second pick in the social media stocks sits at an average of $43.15. This represents a potential upside of nearly 30% from current levels. With $2.5 billion in cash reserves, Pinterest has strong liquidity to continue executing its strategic priorities. The market expects the social media platform to return to profitability by the close of the current year.

Rumble (RUM)

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Rumble (NASDAQ:RUM), a video hosting company seeking to compete with Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) YouTube platform, has often been overlooked within the sector. However, the social media stock price has trended higher throughout 2024, even as losses widened due to rising hosting costs and content investment to attract viewers. Investors appeared reassured by Rumble’s $218.3 million cash position despite $29 million in negative profits.

Rumble is one of those social media stocks that have climbed already higher. It follows explosive gains in DJT after its special-purpose acquisition company (SPAC) merger with Digital World Acquisition (NASDAQ:DWAC) and subsequent Nasdaq listing. Additionally, the company gained notable attention from reports that it may have participated in acquiring TikTok. While not the sole bidder, it could share benefits from involvement in a consortium to assume management of TikTok.

On the date of publication, Stavros Tousios 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.

Stavros Tousios, MBA, is the founder and chief analyst at Markets Untold. With expertise in FX, macros, equity analysis, and investment advisory, Stavros delivers investors strategic guidance and valuable insights.

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