fb-up

3 Top Competitors to Facebook In The Expanding Digital Sector

Facebook has been a major force in the world of social media platforms, but these three companies offer up a different investment option.

Social media is a huge facet of our modern society, it keeps people connected across continents and facilitates cultural change. Facebook (NASDAQ: FB) is the largest social media platform in the world, but it comes with some very worrying moral qualms. So, if Facebook is not the stock you are looking for, here are three top competitors that might do the trick. 

1. Snap Inc.

Although Snap (NYSE: SNAP) has now rebranded itself as a camera company, this stock is still a good one to look at as an alternative to Facebook. Its service is still primarily geared towards social media, but it allows its many users to interact with each other in a myriad of creative ways. 

Snap’s latest innovation is a huge revenue driver as well as an impressive use of digital technology. Its augmented reality application layers digital images as well as other information on ‘reality’ through its use of cameras. Indeed, the company’s ‘TrueSize’ tech will give users the ability to try on glasses during their digital shopping experience. 

This, along with its Wrist Try-On technology and its AR lenses is being used by several companies. Farfetch and Prada use the technology to allow browsers to virtually try on a variety of clothes, whilst Nike uses it as part of its ‘Play New’ advertising campaign, 

Snapchat is immensely popular and in Q2 this year its daily active users (DAUs) increased 23% year-over-year (YoY) to 293 million. Revenue also increased by 116% YoY coming in at $982 million. For Q3, expectations are high with revenue to come in between $1.07 billion and $1.085 billion and DAUs to increase 21% YoY to 301 million.

Investors should be wary of Snap as it is not making a profit, incurring a net loss of $151 million despite its trend of increased growth. As such there are many investors that are not yet sold on this stock.

2. Twitter

Twitter (NYSE: TWTR) is a main player in the social media space, with immediate recognition of its bluebird logo. During lockdown, the company did very well with growth in DAUs as well as revenue. It has continued this into its most recent quarter as it reported revenue of $1.19 billion, up 74% YoY. Strong revenue also drove strong operation income which came in at $30 million. In addition, its monetizable DAUs were up 11% YoY to 206 million. 

Twitter has also recently announced several new services. ‘Tip Jar’, ‘Ticketed Spaces’, and ‘Super Follows’. This will give users the ability to directly tip creators, pay for exclusive access to live events and follow curated content. This, along with its recently launched ‘Communities’ will encourage increased engagement amongst users. 

Twitter has been throwing a lot at the wall recently in the hope that some will stick, but there are some naysayers that believe users are likely to get confused over so many new features. 

Twitter does have a history of low margins. Considering that the company has been around for a while now there are many investors out there who hope for better margins in the future as it continues to expand its reach and increase engagement.

3. Pinterest

In the early pandemic, Pinterest (NYSE: PINS) was a brilliant lockdown stock for investors. It provided many people the space to find inspiration in a broad range of creative outlets as users distracted themselves from the boredom of being stuck at home. 

Pinterest is still a good alternative to Facebook. Pinterest will always be a company that can generate good ad revenue. With 89% of users actively searching for purchase inspiration, 50% of U.S. users are purchasing through the platform itself. Indeed, the company has claimed that its ads are more than double the efficiency for conversion to purchase than other social media platforms. Indeed, Pinterest made it possible to purchase directly from pins, search boards, and images, directly linking into the e-commerce world. 

In its most recent quarter, revenue grew 125% YoY to $613 million, whilst its global monthly active users (MAUs) grew 9% YoY coming in at 454 million. Net income for the quarter was $69.4 million. 

Whilst international MAUs grew 13% YoY, the figures for the U.S. were not so rosy and had a decline of 5% YoY. This led to an 18% decrease in its stock value in one single day as investors reacted to the news. If this decline continues into Q3 and Q4, Pinterest could present a rocky choice just now for any investor. Over the long term, however, Pinterest is still a good option as it continues to develop a closer relationship with e-commerce.

Want access to a list of high-performing stocks? Well, look no further because MyWallSt has a shortlist of investment opportunities that will help you generate long-term wealth. Start your free trial now.