How business used to be done has changed, and the share of transactions, marketing, and sales done in the new digitized economy is growing. Gone are the days of door-to-door salesmanship, unless it is to sell a power-washing or solar panel service, which has several limitations as far as efficiency and scalability are concerned. Today’s business environment is headed to—and focused on—online sales since that is where the attention is.
A license to market and sell a product has been given to pretty much anyone with a relative level of expertise in a given field or topic, and monetization measures have been made easier and more accessible than ever before. This is why more and more businesses will have to switch to doing everything online, from backend operations to advertising and sales funnels.
This is why it is important to keep in mind the technology stocks that currently dominate the space and the ones catching up quickly for future portfolios. Stocks like Meta Platforms Inc. (NASDAQ: META), Alphabet Inc. (NASDAQ: GOOGL), and even Reddit Inc. (NYSE: RDDT) or Spotify Technology (NYSE: SPOT) will see a larger share of online business activity in the coming years, as the cycle that goes from advertising to becoming a marketplace accelerates in those as well.
The Dominance of Leading Social Media Platforms Continues to Grow
According to recent measures by Statista, as of April 2024, the leaders in the social media market share shouldn’t come as a surprise. Measured through monthly active users (MAUs), the leader was Facebook with 3 billion, followed by YouTube with 2.5 billion and Instagram with 2 billion.
This is also where most of today’s business is done; Facebook serves as its own marketplace, charged with payment systems, marketing tools, and the ability to run advertising campaigns and other strategies. When it comes to YouTube, the trend remains there as well, in the sense that businesses and individuals can have a production team make high-quality videos to then migrate an audience to their own websites or other traffic sources, turning views into sales.
Instagram is essentially interchangeable with YouTube. The only major difference is that Instagram caters to shorter content, where businesses can make their “elevator pitches.”
This is where Meta and Google dominate the market, and Wall Street knows all about it.
As of October 2024, analysts at Pivotal Research decided to keep their Buy rating on Google stock and also placed a $225 price target on the company.
To prove these views right, the stock would have to stage a rally of up to 21.5% from where it trades today, not a common expectation for a $2.2 trillion behemoth.
Then the same applies to Meta Platforms stock, as analysts from the UBS Group also kept their Buy rating on the stock with a $719 price target as of October 2024 as well.
This view, which hasn’t changed since then from UBS, calls for up to 16% upside from today’s stock price, which already staged a one-year 86.1% rally.
Now, a new development could help these names gain even more market share: the Chinese-based platform TikTok, which has up to 1.5 billion MAUs. The United States government is back to pursuing a potential ban of the platform, stating that it is giving China access to private data and intelligence within the population.
Based on the nature of TikTok’s content, it would be safe to assume that these 1.5 billion MAUs could make their way into the next best thing, YouTube “Shorts” and Instagram “Reels,” boosting profits and reach for both Google and Meta.
These are the safe ways to play the social media space, but other high-reward market areas come from the exchange of a little bit more volatility.
High-Growth Potential: Double-Digit Upside in Emerging Social Media Platforms
The surge in active users on Reddit and Spotify, combined with emerging monetization opportunities, has prompted Wall Street analysts to issue upgrades and boost valuations for these platforms.
Even after a massive 138.1% rally over the past 12 months, Spotify stock is ready to stage another double-digit rally in the coming quarters.
At least that’s the expectation of those at Canaccord Genuity Group, which reiterated a Buy rating as of December 2024 alongside a $560 share price target.
This new boost would call for up to 19% upside from where Spotify stock trades today, a view that will probably keep an uptrend as the company delivers more quarterly expansions in user count and monetization avenues.
When it comes to Reddit, institutional investors at FMC LLC decided to boost their positions by 302.8% as of November 2024, bringing their net holdings to a high of $801.4 million today, or 6.9% ownership in the company. One reason for the buy could be the upside called for by analysts at Wells Fargo.
As of December 2024, their latest view was an Overweight rating in the stock, this time calling for a $206 share price target for the name. This positioning and view on the company would imply a net rally of up to 27.5% from where it sits today, even after an impressive 161.2% rally over the past 12 months.
