2024 Review: Social Media Stocks Show Diverging Paths
Social media stocks proved to be a mixed bag in 2024. Meta Platforms (NASDAQ: META) emerged as the leader, rising approximately 68% for the year. In contrast, Pinterest (NYSE: PINS) and Snap (NYSE: SNAP) faced challenges, dropping 18% and 34%, respectively. Now that 2024 is behind us, let’s evaluate the outlook for these companies as we look ahead to 2025.
Where should you invest $1,000 today? Our analysts have identified the 10 best stocks to consider right now. Check out the 10 stocks »
Meta Platforms: The Market Leader
Meta Platforms is dominant in the social media landscape with its apps: Facebook, Instagram, WhatsApp, and Threads. The company excels at monetizing its user base, attracting advertisers eager to increase brand visibility and gain new customers. With nearly 3.3 billion daily active users across its platforms, Meta offers extensive reach and a highly targeted audience, thanks to its sophisticated advertising technology.
Last quarter, Meta’s average revenue per user was $11.89, leading to $46.35 per user over the past year. The company is also making significant investments in artificial intelligence (AI) to enhance user engagement and improve advertising effectiveness through targeted recommendations.
Despite its successes, Meta faces scrutiny due to the substantial expenses related to its Metaverse initiative. Last quarter, the Reality Labs segment reported a $4.5 billion operating loss, contrasting sharply with a $19.1 billion gain from its core apps.
Overall, Meta’s revenue increased by 19% in the third quarter, and its earnings per share rose by 37%.
Pinterest: Seeking Growth Through Partnerships
Pinterest offers a platform for users to gather inspiration for various interests like home design and shopping. Boasting 537 million monthly active users, primarily women, the company has concentrated on better monetizing this extensive user base. Recent upgrades have made the platform more shoppable, allowing in-app checkouts and showcasing products from vendor catalogs.
Pinterest also integrated AI to enhance user recommendations and advertising relevance. It partnered with Amazon and Alphabet‘s Google to improve monetization across international markets, recently expanding its collaboration with Amazon to Canada and Mexico.
However, its average revenue per user (ARPU) stands at only $1.70, significantly lower than Meta’s figures. The ARPU in the U.S. and Canada is stronger at $7.31, but Europe sees an ARPU of $1.00 and just $0.14 in the Rest of World category, where it has 300 million users. There is considerable potential for increasing monetization in these areas.
Pinterest posted an 18% growth in revenue last quarter but disappointed investors with a forecast for Q4 revenue growth between 15% to 17%, indicating a deceleration in revenue gains.
Snap: Targeting Younger Audiences
Snap is known for the Snapchat app, which is especially popular among users aged 15 to 25. It reported 443 million active users at the end of Q3. Like Pinterest, Snap’s user base primarily consists of users from the Rest of World category, which has 244 million users. It has succeeded in monetizing these international users better than Pinterest, recording an ARPU of $1.09 in this group and $2.52 in Europe. The North American ARPU stood at $8.54, leading to a global ARPU of $3.10 last quarter.
Currently, Snap is rolling out a reimagined Snapchat, aiming to declutter the app and enhance user experience centered on sharing photos, messaging, and providing short-form video entertainment, similar to TikTok. This redesign is being tested by 10 million users and has a expected rollout in early 2025.
This redesign aims to improve user engagement and boost advertising revenue, though the company has warned of potential monetization challenges.
Snap’s revenue grew by 15% last quarter, while its adjusted EBITDA surged by an impressive 229%.
Image source: Getty Images.
Final Thoughts
Among the three stocks, Meta stands out as the safest choice for 2025, proven as a reliable performer. Pinterest offers enticing opportunities for better monetization, particularly through its Google partnership. However, my top pick for potential growth is Snap. While it underperformed in 2024, it effectively targets a valuable demographic, and the app’s redesign plans could stimulate growth. If TikTok faces potential bans, Snap might be well-positioned to capitalize on the situation, targeting younger users with its updated features. Although it comes with greater risk, Snap’s strong rebound potential makes it an appealing option for 2025.
Should You Invest $1,000 in Meta Platforms Right Now?
Before investing in Meta Platforms, consider the following:
The Motley Fool Stock Advisor analyst team recently identified what they believe are the 10 best stocks to buy now, and surprisingly, Meta Platforms was not among them. The identified stocks have the potential for significant returns in the upcoming years.
For example, if you had invested $1,000 in Nvidia on April 15, 2005, when it made this list, you would now have $847,637!
Stock Advisor offers investors a straightforward plan for success, providing portfolio-building guidance, regular updates from analysts, and two new stock picks each month. Since 2002, the Stock Advisor service has more than quadrupled the returns of the S&P 500.
Discover the 10 stocks »
*Stock Advisor returns as of December 30, 2024
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Geoffrey Seiler has positions in Alphabet and Pinterest. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, and Pinterest. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
