Social media isn't new anymore, but it is still a fast-growing industry.
There are currently around 5.24 billion active social media users worldwide, which is about 64% of the world's population and more than double the active social media user count a decade ago.
The biggest social networks still make most of their money from advertising, but social media is maturing and generating revenue from sources such as e-commerce, digital payments, and video games.
1. Match Group
NASDAQ: MTCH
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2. Etsy
NYSE: ETSY
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Etsy (ETSY +4.82%) is best known as an e-commerce platform, but it stands out for its unique approach to facilitating online sales. Not only does the company specialize in vintage and handmade goods, but Etsy is also an online discovery platform where shoppers directly connect with creators.
Etsy is currently struggling due to a combination of factors. These include a normalization of consumer spending behaviors, increased competition from other marketplaces, and a shift in consumer spending towards necessities over discretionary items. There's also been a perception among some consumers that the platform is no longer broadly focused on handmade or otherwise original goods.
Etsy is focused on investments in enhancing the app experience, personalization, and marketing to reignite sales growth and increase buyer engagement. The platform is leveraging artificial intelligence (AI) and machine learning to improve search, recommendations, and seller tools. Investors who believe in that value proposition may want to take at least a small slice of the action.
3. Pinterest
NYSE: PINS
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The visual sharing, search, and discovery company was a huge winner when millions around the globe flocked to Pinterest (PINS +2.19%) while confined to their homes during the COVID-19 pandemic. Many are choosing to continue using the platform as it ushers in its next era of growth.
With more than half a billion monthly users, it has become a top site worldwide for merchants and creators to advertise their products via a unique picture- and video-based format.
The company is spending strategically to continue increasing its user base and ways for businesses to build their brand on Pinterest. It is generating net income and positive free cash flow, so Pinterest is in increasingly good shape.
4. IAC
NASDAQ: IAC
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5. Bumble
Bumble (BMBL -1.10%) (and its subsidiary Badoo) was founded by a former executive at Match Group's Tinder, and its initial public offering (IPO) in early 2021 raised $2.5 billion in cash. The company stands out for being one of just a few female-founded and female-led companies. Bumble has tried to take a fresh approach to social networking and online dating. Bumble and Badoo's basic features are free to use, and the company primarily makes its money from one-time, in-app purchases and premium subscriptions.
Bumble has struggled the last few years. A saturated dating app market, a decline in overall online dating enthusiasm, and struggles to effectively monetize its user base through premium features have been some issues at play. CEO Lidiane Jones, who was formerly the CEO of Slack, resigned in January 2025, after being in the role for just one year and having taken the helm after Whitney Wolfe Herd's departure. Herd, the founder of Bumble, returned as CEO in March 2025.
Herd's return signals a strategic shift at Bumble towards creating a more curated and higher quality experience for users, leveraging AI, and expanding into other connection-focused avenues like friendships to drive long-term, sustainable growth. The success of this strategy in reversing recent declines in paying users and reigniting growth remains to be seen.
What to look for in a social media stock
When looking at a social media stock and before you buy, consider some key factors, including:
- Look at the number of monthly active users (MAUs) and daily active users (DAUs). Consistent growth in these numbers across different geographic regions and user demographics indicates a strong, expanding user base, which is crucial for long-term success.
- Analyze how effectively the company converts its user base into revenue. For example, rising average revenue per user (ARPU) suggests the company is successfully implementing new ad formats or e-commerce features.
- The amount of time users spend on the platform is a strong indicator of the platform's stickiness and value. High engagement makes the platform more attractive to advertisers and less vulnerable to competition.
Beyond user metrics, evaluate a company's standard financial metrics too, such as revenue growth, profit margins, debt levels, and cash flow. A strong balance sheet provides resilience against economic downturns and funding for future projects.
Should you buy social media stocks?
Social media boasts a vast and expanding global user base, making the market ripe for rapid growth and potentially high returns.
- You can invest in established players like Meta (Facebook, Instagram, WhatsApp) and Alphabet (Google, YouTube), or explore other platforms at various stages of their respective growth stories, like Match Group or Pinterest.
- The social media sector continues to expand with increasing internet access and smartphone usage globally.
- The industry is also embracing social commerce and AI, which could offer durable growth avenues for investors.
- Social media companies often generate revenue through digital advertising, and this reality is only expected to continue as businesses continue to shift marketing budgets to online channels.
There are some drawbacks of investing in this space to consider as well, and to factor into your overall risk tolerance assessment as you form your investment thesis for any given stock.
- The social media landscape is constantly evolving, with new platforms emerging and existing ones competing fiercely for user attention and market share.
- The sector faces increasing government regulation and public scrutiny regarding data privacy, content moderation, and misinformation, which can potentially affect platform operations and revenue.
- Social media algorithms determine content visibility, and frequent changes can harm businesses' ability to reach their audiences.
- Social media stocks, like other technology stocks, can be susceptible to market fluctuations and sentiment-driven trading.
The social media business model is still evolving and changing. With roots in advertising-based revenue, social media companies are finding new ways to connect people all over the world while more effectively monetizing their expansive networks. Investors in social media stocks should be comfortable with buying and holding while the social media industry reaches maturity.
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Strategies for investing in social media stocks
If you want to invest in a social media stock, be sure to analyze a company's competitive advantage or moat. This could be a powerful network effect, a unique technology, or strong brand loyalty. Look into its revenue model(s), user growth, and ability to convert user attention into income.
Instead of putting all your capital into one stock, spread your investment capital across different social media companies, or invest in a basket of social media stocks held in an ETF. The social media landscape is volatile, and new platforms are emerging while user trends continue to shift rapidly. A long-term investment horizon can help investors weather short-term fluctuations.
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