Elon Musk is generating his own news cycle again. This time, the Tesla (NASDAQ:TSLA) CEO isn’t making waves for his focus on electrification. Rather, it’s the social media space that’s been upended, with his acquisition of Twitter. With this deal in the rear-view mirror, many investors may be looking at other social media stocks to buy, as Twitter appears to be sputtering under new management.
Indeed, expectations for this takeover were high going into the closing of this transaction. Many expected Musk to streamline the business and create efficiencies that were lacking. To some extent, he’s made serious progress, slimming down the company’s headcount by around 50%.
That said, other social media stocks appear to be taking market share away from Twitter. On the advertising front, much ado has been made about Twitter losing key advertisers such as Apple (NASDAQ:AAPL), paving the way for other social platforms to pick up the ad dollars that are being left on the sidelines.
Thus, for those looking for social media stocks to buy that aren’t named Twitter, there are plenty of options. Here are three such stocks I think are worth buying right now.
Meta Platforms (META)
The leading company in the social media space since social media was a thing, Meta Platforms (NASDAQ:META) remains the top choice for many investors looking at this sector.
The company’s Facebook social media ecosystem is incredible, and continues to post strong earnings each and every quarter. While active user numbers have recently declined (for the first time ever), in terms of profitability, Facebook remains among the leading companies in this space.
Meta’s primary issue is that the company has shifted its focus toward the metaverse, which has proven to be a very costly endeavor. Thus, a lack of visibility toward profit growth has some investors sitting on the sidelines.
That said, the company has been dialing back its spending in recent weeks with layoffs of 11,000 employees — 13% of its workforce. In all likelihood, this gamble on the metaverse is more of a call option on this being the “next big thing,” which may not see returns for another decade. Considering that other spending is being ratcheted down, Meta is keeping the rest of its balance sheet a little safer in the meantime.
Among the top social media stocks I continue to like at these lower levels is Pinterest (NYSE:PINS). The company’s stock price has been volatile this year, but despite the chop, has actually held up quite well compared to its peers.
Much of this has to do with the company’s earnings and growth prospects. On the revenue front, this current quarter’s estimated earnings stand at $883.86 million. This represents an increase of less than 5% year-over-year, leading to an overall annual revenue estimate of $2.81 billion (up 9%). Next year, the company estimates it will be able to haul in $3.24 billion, more than 15% higher compared to 2022.
Pinterest is among the leading platforms for users to share creative and other ideas via social media. It also helps users get much more organized with creative projects. It’s a platform with a loyal user base and some impressive monetization capabilities, since these users are all shoppers who don’t really know what they want yet. For brands looking to make an impression, this is the place to start.
The company’s fundamentals have remained solid, and I think will continue to provide strong profitability, even if we should be headed into a recession next year.
Snap Inc. (SNAP)
Rounding out this list of social media stocks to buy is Snap Inc. (NYSE:SNAP). Certainly the most speculative pick on this list, Snap (the parent company of Snapchat) has produced a social media platform that’s unique in its approach as a camera application. (All those dog-ear filters you see come from somewhere).
Although people of all age groups use social media, younger people are more active. Snapchat is extremely popular with youngsters, especially among teens. Thus, this is a company serving a target market that advertisers may pay more for, given that the expected return may be higher for younger buyers due to a longer lifetime spending trajectory.
This platform continues to grow rapidly, with daily active users growing at a double-digit pace. However, the company’s stock price has absolutely plunged on weakening sentiment for the sector and various negative earnings surprises of late.
Despite Snap’s negative earnings profile right now, I think the company’s 77% drop year-to-date warrants a look by long-term growth investors. This is a company that’s looking very attractive for those looking to build small positions in companies that have significant upside potential right now.
On the date of publication, Chris MacDonald has a position in META, PINS and SNAP. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.