With more than 2.7 billion monthly active users (MAUs) as of June 30, 2020, Facebook, Inc. (FB) is the biggest social media company. However, as the company is maturing, revenue growth is expected to decline within the absence of new revenue sources. The company’s CFO, David Wehner, stated that he expects growth to decelerate in the coming quarters due to the maturity of the business. As a result, it could be hard for the stock to replicate its remarkable gains.
FB’s growth could be stunted due to the saturation of social media. To sustain its growth, the social media giant will have to start considering other revenue streams. Among the new areas of focus for FB is Portal, its smart video hardware, used by its Messenger and WhatsApp for video calls. The company, however, has to face stiff rivalry from Amazon’s Echo Show, a similar product. The second one is Oculus, FB’s virtual reality hardware. There is a high demand for VR devices at reasonable prices, but FB has to face competitive pressures in expanding its user base.
Meanwhile, FB is faced with regulatory challenges. According to The Wall Street Journal, the Federal Trade Commission is considering filing a suit against FB by the end of the year. Moreover, if the Democrats win the Presidential elections, things could get complicated for the company. The new government may even consider splitting up the company and order it to divest Instagram and WhatsApp based on an antitrust probe.
Over the past six months, the stock has rallied 53.8% and closed at $284.8 on Friday. Despite the stellar market performance, there is an air of uncertainty around FB. So, it’s time to look at other relatively smaller social media stocks that have tremendous growth prospects and unique offerings. Snap, Inc. (SNAP), Twitter, Inc. (TWTR), and Pinterest (PINS) are three such stocks that could be better additions to your portfolio now.
Snap, Inc. (SNAP)
SNAP is a social media company that connects people through visual communication, storytelling, and other modes of self-expression. It is an app that allows users to enhance and customize images and videos according to their preferences. Snap also has a broad line-up of video content and games that are immensely popular among millennials. The company has three major brands under its umbrella — unique-Snapchat, Spectacles, and Bitmoji. Out of these three, Snapchat is widely used and it connects millions of people.
SNAP is now venturing into a new territory which is original content and storytelling. Earlier this month, the company launched Snap Originals, a platform that focuses on short-form content. Snap Originals will have a line-up of short series with episodes spanning an average length of a maximum of five minutes. Snap Originals will feature some of the famous entertainers like Trippie Redd, Loren Gray, Haden Smith, MK Asante, and Colin Kaepernick among others.
During the third quarter ended September 2020, SNAP delivered revenue of $678.67 million, surpassing analyst expectations by 22.1%, largely driven by advertisements. Compared to the year-ago period, its revenue…
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