Social media stocks to sell aren’t just a passing thought anymore. Over the past few years, we’ve seen how social media has played second-fiddle to other cutting-edge technologies in the investing world. Last year’s rapid rise of artificial intelligence (AI) sparked incredible investor interest, propelling AI stocks to unprecedented levels.
This transformation points to a maturing market where growing competition and evolving user habits threaten the long-term growth trajectories of social media companies. Therefore, investors need to tread carefully, considering the broader implications of these shifts. This evolving landscape suggests trimming unattractive social media investments might be wise to limit the downside risk. With that said, here are three social media stocks to sell that you’re better off offloading at this point.
Trump Media & Technology (DJT)
Despite its ongoing financial woes, Trump Media & Technology (NASDAQ:DJT) stock continues to buck the trend. DJT is up an eye-watering 162% year-to-date (YTD), which is mostly linked to political sentiment than traditional operational metrics. It recently posted a massive $327 million loss against just $770,000 in sales in the first-quarter, leading to a 10% post-earnings dip. Moreover, its social media platform Truth Social, saw a 19.7% drop in its user base yea-over-year (YOY).
These figures point to a grim reality with the stock’s performance effectively hinging on former President Trump’s political influence and potential re-election in November. Additionally, the firm’s major legal battles add to these challenges, which could destabilize its operations further. Trump Media is involved in multiple disputes over capitalization rights and share conversion ratios, raising major concerns over its governance and transparency. Hence, DJT’s current predicament is less reflective of its economic performance and more a barometer of political enthusiasm.
Match Group (MTCH)
Online dating company Match Group (NASDAQ:MTCH) faces stiff headwinds. It is the company behind popular dating apps such as Tinder, Match.com and Hinge, and has been hugely popular over the years. Though online dating remains popular, the influx of free competitors and evolving user preferences reshape the market.
Moreover, Tinder, the most dominant brand in the online dating niche, is losing its grip on the market. Other platforms like Bumble (NASDAQ:BMBL) continue to gain ground and are expected to surpass Tinder in popularity this year. Moreover, this trend can be seen in its Q1 results, where its paying user base dropped 6% across its portfolio. There was an even steeper 14% decrease in the Americas.
Given these dynamics, it is risky to anticipate further upside in MTCH stock without clear strategic adjustments to address these market shifts. To be fair, it hasn’t been the most rewarding investment over the years, with a negative 80% return in the past three years alone.
Weibo (WB)
Weibo (NASDAQ:WB) was once one of the most popular players in the Chinese social media landscape. Today it faces a grim reality. Its stock is down in the doldrums amidst broader market headwinds, escalating competition and a significant drop in revenue growth. Recent financial reports underscore the firm’s challenges with it delivering seven consecutive quarters of negative top-line growth. Its stagnation is more alarming considering the company’s massive user base, which has yet to translate into strong financial returns.
Morgan Stanley analysts led by Alex Poon recently downgraded the stock to ‘underweight’ from ‘equal-weight’ dampening Weibo’s outlook. They raised concerns over the company’s diminishing ad revenue growth, which is forecast to barely increase by 2% this year. Moreover, with its cost optimization completed and its dividend announcement already baked in, it’s tough to expect much upside in Weibo stock. Therefore, it will continue to erode shareholder value, as it has for the past decade.
On the date of publication, Muslim Farooque 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