Are All Social Media Stocks In Deep Trouble?

By Greg Guenthner Nov 7, 2015, 12:01 PM 

Sometimes, I feel bad about kicking a stock when it’s down.

This is not one of those times…

Just check out one of my favorite social media punching bags: Groupon (GRPN). 2015 hasn’t exactly been a banner year for the “daily deals” service. Business Insider reports that “growth has stalled” as revenues tanked during the third quarter. Things have gotten so bad for Groupon that the company even replaced its CEO this week.

The result? The stock’s performance has gone from bad to put me out of my misery bad. Shares dropped nearly 30% yesterday. Take a look:


Groupon’s chart has never been much to look at. But neither has the company, in my view. I’ve never been a fan of Groupon’s business model. Blasting out coupons via email is a business that has virtually no moat. Competitors big and small can easily compete with very little effort. That’s a problem when you’re looking for unique investments in the social sphere…

So are all social media stocks in deep trouble? Can we expect more crashes throughout these stocks like we’ve experienced with Groupon?


Sure, Twitter (TWTR) is going through its own problems right now. But LinkedIn (LNKD) is back on track. And the granddaddy of the social media world— Facebook (FB)—has never been stronger.

Facebook reported third quarter earnings on Thursday. And it’s safe to say the company knocked it out of the park. It’s growing its ad revenue and user base like no other major social media competitor.

“In 2012, Facebook announced that it had a billion monthly active users— a headline-making accomplishment at the time,” Fast Company noted after the Facebook earnings release. “Last August, it disclosed that a billion people had visited on one particular Monday, the first time it had broken that barrier in a single day. That Monday was no fluke. On Thursday, as the company announced strong financial results for its third fiscal quarter, it said that as of September, the service now averages 1.01 billion users per day.”

You read that correctly: more than a billion people log on to Facebook every single day.

Just look at the updated statistics Facebook released on Thursday:

Did that grab your attention? I thought those big numbers might do the trick.

There’s no overstating this point: While Groupon and the other also-rans in the social media world try to keep their heads above water, Facebook is soaring.

Back in early August, I told you that Facebook stock was heading straight for $100. And now that it’s blasted through that barrier, more gains are on the way. The company is making a huge push into emerging markets that even includes bringing internet service to those who previously had no access at all. While the Twitters of the world worry about changing “favorites” to “likes”, Facebook is pushing forward with ambitious growth plans.

As of early this morning, Facebook shares are set to open near $107. This could be the beginning of another strong thrust higher for a stock that has more than doubled over the past two years.

Don’t chase the second-rate social media lemmings off the cliff. Buy Facebook. You’ll “like” that you did.

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