(Newswire.net — April 8, 2017) — The recent success of SnapChat’s IPO has brought to light a new trend in investing: social media. Shares of SNAP were offered at just $17 per share in the late winter of this year, giving the company a $24 billion valuation. And other platforms have experienced similar success. Investors seek to buy shares in Instagram, Facebook and Google+ among others, demonstrating that social media is one of the fastest growing trends in investing.
But why? Isn’t social media just for selfies and memes? The short answer is no. These platforms have grown to include a diverse range of applications for just as diverse a population. Social media isn’t just for viral videos anymore. From freelancer writers who want to build a network of clients to healthcare professionals collaborating on research, users are growing increasingly dependent upon these sites.
In response to their popularity, the social media giants have begun to expand the methods by which they generate revenue. Facebook, for example, may soon be in close competition with Amazon and Google for shares of marketing revenue. In 2016, the company reported revenues from advertising which totalled more than those earned by Disney and Comcast. And Facebook’s popular Instagram is projected to earn at least $3 billion in ad revenues in 2017.
While Google+ isn’t the most popular of the social media platforms, parent company Alphabet Inc is certainly diverse. Aside from its $19.1 billion advertising revenue, Alphabet owns well known products like YouTube and Android, which are also extremely profitable.
So what does this mean for the future of social media investing? It means that to convince investors to buy shares in their brands, the social media executives will have to increase their presence in the market by offering new products. And some companies are already ahead of the game; Facebook’s purchase of VR developer Oculus and Google’s Google X research division are examples of this.
So how do you invest in social media? It would seem that you’d simply need to steer clear of the one trick ponies. While Facebook and Google are among the companies which are diversifying their brand to include new technologies, there are other platforms which have not been as successful. Microsoft recently purchased LinkedIn for $26.2 billion – this networking platform for professionals was really nothing more than a web directory of resumes. And Twitter’s not doing so great, either. The platform which built its success upon their signature succinct “tweets” entered the playing field in 2013 with an IPO of $26 per share, but at the time of this article was trading at $14.29. It may be too late for LinkedIn, and unless Twitter begins to encompass a broader spectrum of products, it may not see a bright future either.
If you’re looking to buy shares in social media, look to the companies which show inclination toward not only expanding through acquisitions, but also through creating their own research and development initiatives. It is these platforms which have the ability to adapt to changes in the market that will prove to be good buys for investors.