Social media stocks have had a great run so far in 2013. In
social media ETF (
has added 47% so far this year, including nearly 33% in the past
However, recent trading in the space has been a whole lot choppier,
as earnings season for the industry gets underway. Many companies
in the space have posted lackluster guidance, or have just
generally failed to impress investors with their numbers.
Plus, many companies were trading lower into the earnings season,
leading to a slump for many of the top social media stocks.
Consider how some of the biggest firms in the space have traded
over the past 10 days (including the first part of today's
) down 4.2%
) down 5.3%
) down 6.6%
) down 14.3%
) down 2.8%
Social Media ETF (SOCL) down 4.2%
This is pretty concerning, especially considering that the S&P
500 is up over 1.6% in the same time frame, but is it time to
After all, ZNGA, FB, SOCL and YELP have Ranks of at least #2, while
no security listed above has a Rank worse than #3. So at least on
the earning estimate front, the space is looking quite well.
However, given the recent trading in the space and the slowdown in
growth projections in many names, can these positive ranks hold up?
Many companies in the space are trading at sky-high valuations, so
high growth will be needed to justify some of the multiples in the
But what do you think? Is the run in social media over, or is this
just a pause before the next leg higher?
Let us know in the comments section below!
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