Finder may earn compensation from partners, but editorial opinions are our own. Advertiser Disclosure

Investing in social media stocks

They’re trending, but stiff competition may give way to volatility.

It’s exciting to say you own a slice of the technology you interact with on a daily basis. But social media stocks are far from secure investments. While the industry is on an upward trajectory, fierce competition may lead to increased volatility and company acquisitions.

13 social media stocks

There are plenty of pure-play social media stocks on the market, like Facebook and Twitter. But you can also opt for larger tech companies with social media platforms under their belt, like Amazon or Google. Select a company to learn more about what they do and how their stock performs, including market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield. While this list includes a selection of the most well-known and popular stocks, it doesn't include every stock available.

What ETFs track the social media category?

If you’re seeking a broader approach to the social media category, consider the Global X Social Media Index ETF (SOCL). This technology sector ETF was founded in 2011 and boasts net assets of over $471 million. It primarily invests in the Nasdaq and focuses on social media stocks from the US and around the world, including Facebook, Naver, Spotify, Tencent, Twitter and Yandex.

Robinhood

Our pick: Robinhood

Make unlimited commission-free trades in stocks, funds, and options with Robinhood Financial.

  • Easy-to-use interface
  • No commissions or minimums
  • Trade fractional shares. Get started with just $1
Go to site
on Robinhood's secure site

Read review
Available asset types Stocks, Options, ETFs, Cryptocurrency
Stock trade fee $0
Option trade fee $0
Annual fee 0%

Why invest in social media stocks?

As our world becomes more connected and reliant on the Internet, it’s little wonder that tech sector subcategories like social media are on the up-and-up. With more brick-and-mortar businesses migrating to e-commerce sales channels, online advertising has become a booming business. And in the online advertising space, social media is a sizzling slice of real estate.

Overall, the social media category is doing well. Facebook reported an 8% year-over-year increase in daily active users in its Q1 2021 earnings report. Twitter is also seeing healthy growth, reporting a 20% year-over-year increase in monetizable daily active users in Q1 2021.

And the new kids on the block are thriving, too. TikTok amassed some 178 million downloads in the first quarter of 2021, according to Sensor Tower, this is lower year-over-year but still an impressive number.

Risks of investing in social media

The biggest threat to an investment in social media is the inherent competition that dominates the industry — and the tech sector as a whole. This tech category moves fast and is highly competitive. And while competition can drive growth, it can also promote volatility, driving some stocks up, while crippling others.

Competition also paves the path for company mergers and acquisitions. If another company acquiresthe social media stock you’ve invested in, you might be reimbursed with cash or find your shares swapped for shares in the acquiring company, potentially disrupting your investment strategy or throwing off the balance of your portfolio.

Another consideration is the vulnerability of social media stocks to government jurisdiction. Tech companies have come under fire in recent years for infringing on data privacy rights.

Former President Donald Trump’s TikTok altercation is a prime example of this type of legislation at work. Companies may find themselves banned, limited or forced to rethink platform features in response to emerging governmental regulations.

Compare trading platforms

Depending on whether you want to trade short-term or invest in a social media stock for the long-term, find a broker accordingly. Long-term brokers have no inactivity fees, while short-term brokers have no commission on stocks.

Name Product Asset types Option trade fee Annual fee Signup bonus
Robinhood
Robinhood
Stocks, Options, ETFs, Cryptocurrency
$0
0%
Free stock (chosen randomly with a value anywhere between $2.50 and $200)
Sign up using the "go to site" link
Make unlimited commission-free trades in stocks, funds, and options with Robinhood Financial.
J.P. Morgan Self-Directed Investing
Stocks, Bonds, Options, Mutual funds, ETFs
$0 + $0.65/contract
0%
N/A
INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
Vanguard Personal Advisor
Stocks, Options, Mutual funds, ETFs
N/A
$20 per year
N/A
Financial advice powered by relationships, not commissions.
TradeStation
Stocks, Bonds, Options, Mutual funds, ETFs, Cryptocurrency
$0 + $0.50/contract
$0 per month
$50
Deposit qualifying assets of $5,000+
A platform built for all kinds of traders and all styles of trading
Sofi Invest
Stocks, ETFs, Cryptocurrency
N/A
0%
Get one free stock worth up to $1,000
Open an account
A free way to invest in stocks, ETFs and crypto.
Moomoo
Stocks
$0
$0 per year
Get a free stock valued up to $350
Open your Futu brokerage account via Moomoo
Trade stocks on the US, Hong Kong, Shanghai and Shenzhen markets.
loading

Compare up to 4 providers

*Signup bonus information updated weekly.

Disclaimer: The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.

Bottom line

The social media subcategory is growing — and fast. But industry competition and emerging data regulations may put a damper on profits.

Review your account options across multiple platforms for the brokerage best suited to your investment needs.

More guides on Finder

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and finder.com Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site