Stocks to buy

3 Social Media Stocks to Buy on the Dip: July 2024

Social media stocks have been pulled lower by the rotation out of technology securities. However, social media remains a force both in society and the market. Today, nearly five billion people use social media sites — 60% of the world’s population. For many people, social media is not only how they connect with other people but also how they consume news, information and conduct financial transactions.

Social media sites make the vast majority of their money from online advertising. And ad spending is on the rise. According to Statista, advertising on social media platforms is forecast to reach $219.8 billion this year and rise to $255.8 billion by 2028. The number of people using social media in their daily lives is projected to top six billion within the next four years. Given its growth and influence, it’s not surprising that social media stocks make for good investments.

Here are three social media stocks to buy on the dip: July 2024.

Pinterest (PINS)

Source: Nopparat Khokthong / Shutterstock.com

The stock of Pinterest (NYSE:PINS) is up only 5% this year and has been on a steady downslope since the rotation out of technology securities began. PINS stock has fallen 16% since the end of June. However, the share price is still up nearly 40% over the past 12 months. Investors might want to take advantage of the dip and buy Pinterest stock before it rebounds.

The financials at Pinterest have been improving, with the company most recently reporting a 150% year-over-year rise in its profit. Pinterest also raised its guidance for this year’s second quarter, which it is scheduled to report on July 30. The photo sharing platform has benefitted from a recovery in online advertising as well as new partnerships, including one with e-commerce giant Amazon (NASDAQ:AMZN).

Meta Platforms (META)

Source: rafapress / Shutterstock.com

Meta Platforms (NASDAQ:META) might be all-in on artificial intelligence (AI), but the company’s bread-and-butter remains its social media platforms. Despite shifting its focus internally to AI and the Metaverse, Meta Platforms still runs popular social media sites such as Facebook, Instagram and WhatsApp. Combined, the company’s social media sites brought in $35.64 billion in advertising revenue during the first quarter, a 27% year-over-year increase.

Facebook’s daily users totaled 3.24 billion at the end of Q1 this year, a 7% increase from a year ago. The company credited a sharp rebound in online advertising with its earnings more than doubling to $2.20 a share. Meta reports its Q2 financial results on July 31. Ahead of that print, META stock appears to be on sale, having fallen 11% in the last month amid the rotation out of mega-cap tech names. Strong Q2 results could quickly reverse the slide in Meta stock, making now a good time to take a position.

Alphabet (GOOG/GOOGL)

Google parent company Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) likely isn’t the first company people think about when it comes to social media. But Alphabet owns video sharing site YouTube, which is a global force when it comes to social media platforms. Launched in 2005, YouTube today has 2.5 billion monthly active users (second only to Facebook) and generates annual revenues of nearly $30 billion, mostly from advertising.

The importance of YouTube to Alphabet was recently underscored when the technology giant reported its second-quarter financial results. Despite beating Wall Street forecasts for nearly every metric, Alphabet announced that YouTube’s advertising revenue came up short at $8.66 billion versus consensus forecasts of $8.93 billion. That miss at YouTube was enough to send GOOGL stock down 4%. The video sharing platform remains a key operating unit of the diversified technology concern.

While Alphabet stock is up 36% over the last year, it has declined 9% during the past month, opening up a buying opportunity.

On the date of publication, Joel Baglole held a long position in GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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