The top social media stocks of 2023 saw much relief, with many clocking in high double-digit percentage gains. And now, social media firms are moving from saving money to AI investing. The strategy is to gain an edge over rivals in winning user engagement.
Social media stocks will continue their course as the financial benefits of AI appear steadily over time. Although the social stocks’ 2023 gains may not repeat in 2024, it isn’t time to throw in the towel yet. So, let’s explore such stocks to see which deserves a spot on your watchlist for the new year and beyond.
Snap (SNAP)
Snap (NASDAQ:SNAP) has been snapping back since bottoming out in late September. This partly due to a notable analyst upgrade, AI feature news, and impressive Snaperchat+ numbers, with over 7 million subscribers. Shares more than doubled (103% gains) from trough to peak. Then, they slipped just north of 9% as a part of a broader pullback in tech.
Recently, Wells Fargo named Snap as one of its top platform picks. I think the recent dip should be watched closely by investors interested in the name. Snap isn’t just waiting for industry tides to shift back in its favor. Instead, the firm is tapping into creativity for its platform. Thus far, they’ve resonated with some users.
As Snap continues AI experimentation, perhaps it could evolve into a social media mentor. Quite possibly, other up-and-coming firms may go beyond the TikTok age.
Meta Platforms (META)
Undoubtedly, Meta Platforms (NASDAQ:META) has been the most incredible of all. It boasts impressive moves and ultimately made an enviable 178% gain for 2023.
Perhaps the most enticing of the Magnificent Seven right now, the stock’s glorious 2023 comeback is a work of beauty. It’s tempting to take profits as tech begins to show a bit of fragility in the early stages of 2024. However, it could be a mistake to dump Meta while its stirring the AI and metaverse pots.
Through 2024, I expect AI to continue strengthening Meta’s Family of Apps. Additionally, we may finally see the metaverse, which peaked in 2021-22, return to the spotlight.
Not only are new Meta Quest headsets more capable than their predecessors, opening up windows within digital realms, but also prices on older headsets are coming down. High-end users will be kept happy with the latest and greatest. But newcomers will be lured to give virtual reality (VR) a try with cheaper headsets. It’s a win-win scenario, all while new games and social experiences look to flow through the VR pipeline.
Pinterest (PINS)
Pinterest (NASDAQ:PINS) had a relatively muted year compared to Meta. Despite solid 2023 gains, the stock remains down over 58% from its 2021 all-time high. Indeed, the Pinterest bubble has burst. The comeback has been less fierce. Yet, I do believe investors have a lot to gain with the social underdog at this depth.
Evercore analyst Mark Mahaney sees Pinterest’s earnings growth accelerating in 2024. Also, the image-sharing social-media platform is a top platform pick of Wells Fargo. At a mere 8.7x price-to-sales (P/S), PINS seems like a tempting low-cost growth pick to make up for lost time in the new year.
Therefore, Pinterest may be a relative social media underdog that could surprise all of us in 2024.
On the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.