By George Leong, B.Comm. for 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.
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.
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.
- Will Yelp Inc (YELP) Become the Next $10 Billion Social Media Company? (insidermonkey.com)
- Zynga’s a Razor-Sharp Falling Knife (fool.com)