Performance trouble ahead in social media?
Social media stocks had a rally in 2014. But will their promising return continue in 2014? It is plausible. However, recent valuations are discounting huge growth rates. And given the recent Twitter earnings release, which left investors in shock as the release showed a slow down in user engagement and growth, the promise of social media stocks has to be revised.
Saxo Bank regards it as a signal for trouble ahead in social media. We recommend finding better and more reliable investment opportunities elsewhere.
The Stock Performance Doesn’t Lie
Social media stocks returned 66.7% in 2013 driven by strong performance in Facebook, LinkedIn and Tencent. But in early 2014 social media stocks are down 1.1% compared to the NASDAQ Composite Index being down 2.9%.
Take a closer look at the data below, showing share price performance on a social media ETF holding social media stocks: