By Profit Confidential
Social media stocks appear to be sizzling on the charts once again in what has largely been an on-again, off-again trading pattern.
Facebook, Inc. (NASDAQ/FB) proved this after surging 30% on July 25, following its reporting a blow-away second quarter in which the social media giant beat on earnings (36%) and revenue growth (53%) year-over-year. The company’s 1.15 billion monthly active users as of June 30 was impressive. Better yet, of this amount, about 819 million of these users were mobile, up 54% year-over-year.
The numbers are excellent. I continue to like Facebook. But more importantly, I see major growth going forward for Facebook in the critical mobile market, from which the company derived 41% of its total advertising revenue. The company remains a buying opportunity, especially if it can monetize its massive subscriber base.
Chart courtesy of www.StockCharts.com
A highflyer in the Internet space, Yelp, Inc. (NASDAQ/YELP) operates local business sites across many cities and countries and links consumers to local businesses. Yelp’s valuation is high, but revenues are estimated to grow 59.7% this year and 43.0% next year, according to Thomson Financial. Yelp is also estimated to turn a profit of $0.18 per diluted share in 2014.
Chart courtesy of www.StockCharts.com
On the speculative side is social games developer Zynga Inc. (NASDAQ/ZNGA), which holds some promise in spite of it being down from its $14.00 level in May 2012, when Facebook dropped games from its offering. Zynga is at best extremely speculative and only for traders.
Chart courtesy of www.StockCharts.com
In China, a key small-cap social media networking play is Renren Inc. (NASDAQ/RENN). The company operates a real-name social media networking Internet platform in China. The platform is for social networking, and it allows users to connect with each other. The social media company’s services include social networking, online gaming, social commerce, and business social networking.
Chart courtesy of www.StockCharts.com
The company had 184 million active users as of March 31, and based on the massive Internet market in China, it wouldn’t be a surprise to see the company’s active users double, triple, or even quadruple over the next two to five years. Then there’s also the possibly of a company like Facebook buying Renren to advance its audience in the Chinese market.
As we move forward, the Internet space is only going to get stronger and offer more buying opportunities, especially in the area of social media stocks.
Find out what my favorite video streaming companies are in “Now That the Video Streaming Wars Have Begun, Who Will Win?”
Article by profitconfidential.com
