Social media stocks were a mixed bag in 2024. Meta Platforms (META +0.40%) was the big winner of the group, up about 68% on the year, while Pinterest (PINS 1.80%) and Snap (SNAP 0.68%) were down 18% and 34%, respectively.
With 2024 behind us, let's see which of these three looks best position to outperform in 2025.
Meta Platforms
Meta is the king of social media through its Facebook, Instagram, WhatsApp, and Threads platforms. What the company has been able to do much better than any other social media platform owner is monetize its user base. Its Facebook and Instagram platforms are two of the first places advertisers go to increase their brand exposure and acquire new customers. With nearly 3.3 billion active daily users across its apps, it not only has an extensive reach but also gives advertisers a very targeted audience with its advanced adtech solutions.
NASDAQ: META
Key Data Points
The company's strong success monetizing its user base can be seen in its average revenue per person metric, which came in at $11.89 last quarter. Over the past 12 months, it generated an average of $46.35 per user.
Meta is investing heavily in artificial intelligence (AI) with it Llama AI models. It's using AI to help drive user engagement through better feed and video recommendations, as well as increased ad effectiveness. Advertisers can also use its AI tools to better create ads.
One knock on the company is that it spending a lot of money still pursuing the Metaverse, its vision of a virtual world. Its Reality Lab segment posting a $4.5 billion operating loss last quarter. That compares with a $19.1 billion operating gain from its apps.
Overall, Meta grew its revenue by 19% in the third quarter and its earnings per share by 37%.
Pinterest operates its namesake online vision board, where visitors go to find inspiration for things such as home design, travel, outfits, and shopping. The company has 537 million monthly active users, the majority of whom are women, from around the world.
The company invested heavily over the past few years to better monetize its large user base. It has made its platform shoppable, adding in-app checkouts and making similar items buyable from merchant catalogs. More recently, it integrated AI into its platform to improve recommendations and ad relevance. It recently launched Performance+, an automation and AI-driven budgeting and bidding tool to help simplify campaign creation and improve advertisers' return on investment.
NYSE: PINS
Key Data Points
Meanwhile, the company formed partnerships with Amazon to bring shoppable content to the Pinterest platform, and with Alphabet's Google to help better monetize international markets. It recently expanded its deal with Amazon to Canada and Mexico.
The company has been working to increased its average revenue per user (ARPU), which was only $1.70 last quarter, a far cry from Meta's $11.89. Its U.S. and Canada ARPU was pretty solid at $7.31 last quarter, but it's far behind in international markets, with its European ARPU $1.00 and the Rest of World (RoW) only $0.14. With 300 million of its users in the RoW category, improving monetization in these geographies is a huge opportunity.
Pinterest grew its top line by 18% last quarter and forecast Q4 revenue growth of between 15% to 17%, which disappointed investors, as revenue growth as been decelerating as the the year has gone on.
Snap
Snap owns the Snapchat app, which is popular among younger audiences. In the U.S., nearly half the app's users are between 15 and 25. At the end of Q3, the app had 443 million active users.
Like Pinterest, its user base also skews heavily toward the RoW category, where it has 244 million users. However, it has done a better job of monetizing international users, with ARPU of $1.09 last quarter in RoW and $2.52 in Europe. Last quarter, its North American ARPU was $8.54 and its overall global ARPU was $3.10.
The company is currently rolling out a new, simpler Snapchat to help declutter the app to focus the user experience on pictures, chatting with friends, and offering short-form video entertainment to more resemble TikTok. Currently there are 10 million users testing the new design, with the app to be rolled out in Q1 of 2025 at the earliest.
NYSE: SNAP
Key Data Points
The ultimate purpose of the redesign is to help drive engagement and increase ad revenue. However, the company warned of the potential of monetization risks.
Last quarter, the company grew its revenue by 15%, while its adjusted EBITDA soared 229%.
Image source: Getty Images.
The verdict
The safe choice among the three stocks in 2025 is Meta, as the company has been a proven winner. Meanwhile, I really like Pinterest's opportunity to better monetize international markets, especially with its Google partnership.
However, I'm going with Snap as my choice of the social media stock most likely to outperform in 2025. The stock was the worst performer in 2024, but it reaches a valuable demographic, and its redesign could help spark growth. Meanwhile, if TikTok gets banned, it appears to be the best positioned to benefit given its younger demographic, and its redesign looks poised to try to take advantage of this potential opportunity. While it carries a bit more risk than the other two, it looks to have some solid rebound potential in 2025.
