Social media continues to be a force in society and in the business world. The latest industry statistics show that there are 5.17 billion social media users worldwide today. The average person uses seven different social media networks each month, spending, on average, two hours and 38 minutes each day on the platforms and websites. That’s a lot of time online and accounts for the sector’s continued growth alongside some strong social media stocks to buy.
Social media companies continue to rely on online advertising for almost all of their revenue. Those ad dollars are rolling in once again after suffering a pullback coming out of the pandemic. This year, social media advertising is projected to reach $220 billion. Advertising on social media is getting a boost from two catalysts in the second half of 2024, the Paris Olympics this summer and the U.S. presidential election in the autumn.
Here are three social media stocks to buy now in May 2024.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) is getting a big boost from a resurgence in online advertising on its social media sites such as Facebook and Instagram. While the company tends to get a lot of attention for its focus on artificial intelligence (AI), the truth is that Meta Platforms remains, first and foremost, a social media concern. Advertising revenue, which accounts for most of Meta’s business, rose 27% in the first quarter to $35.64 billion.
Another reason to be bullish on Meta Platforms is that the company has begun paying a dividend to its stockholders. Meta now pays a dividend of 50 cents a share each quarter. Meta is also undertaking an expanded $50 billion share repurchase program. The dividend and stock buybacks are just one more reason to take a position in META stock. Over the last 12 months, the company’s share price has risen 89%.
Reddit (RDDT)
Social media company Reddit (NYSE:RDDT) has wasted no time building on its successful initial public offering (IPO) at the end of March this year. The company, which runs online message boards and chat rooms, issued a strong first earnings report as a publicly traded company, sending its stock up 15% as a result. Then, Reddit announced a new partnership with AI start-up company OpenAI, which sent its stock up another 11%.
The OpenAI partnership is expected to attract more users to Reddit’s social media platform with helpful AI-enhancements. OpenAI has also agreed to advertise on Reddit’s platform, giving a boost to the company’s earnings. Going forward, Reddit will leverage OpenAI’s technology, including its ChatGPT chatbot, to build tools and features that integrate Reddit’s content in real time.
Reddit generates nearly 100% of its revenue from online advertising on its message boards. Strong advertising dollars enabled Reddit to beat analyst estimates with its most recent earnings print. RDDT stock is up 24% since the company’s IPO two months ago.
Pinterest (PINS)
Shares of Pinterest (NYSE:PINS) have been a tear over the last year. PINS stock has risen 78% in the last 12 months, including a 14% gain this year. It’s a big reversal for the company that enables people to share videos and images online. Coming out of the pandemic, Pinterest’s stock got hit hard. So hard, in fact, that PINS stock is still 52% below its 2021 peak. Still, the company now has 500 million monthly active users.
The recovery over the past year has been due to better-than-expected financial results that have shown consistent growth in the company’s revenue. Like the other names on this list, Pinterest is benefitting as online advertising comes storming back. PINS stock jumped 18% higher in one day after the company’s first-quarter earnings print. The results showed that Pinterest’s revenue for the quarter rose 23% to $740 million. Both sales and profits crushed Wall Street forecasts.
On the date of publication, Joel Baglole did not have (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.