Wall Street Favorites: 3 Social Media Stocks With Strong Buy Ratings for June 2024

Stocks to buy

The indispensable role of social media platforms in the digital age has many analysts optimistic about strong buy social media stocks

In just a few short years, social media has had a far reaching influence on people and businesses interacting and communicating. The widespread presence and integration of these platforms into our daily lives have made them a force unto itself. 

Hence, it comes as no surprise that companies in the space are thriving and growing at unprecedented rates. Experts predict that the number of social media users will jump to 5.85 billion by 2027, with the industry experiencing a compound annual growth rate (CAGR) of 26.6% from 2023 to 2030. This will be amplified by artificial intelligence (AI), which will grow the combined market value to a whopping $9.59 billion by 2030

These staggering numbers have analysts rating several top names in the sector as strong buys. Investors looking to capitalize on these gains should consider adding these stocks to their portfolios. 

Pinterest (PINS)

Source: Ink Drop / shutterstock

When Pinterest (NYSE:PINS) first launched, it served as a platform for people to “pin” ideas from across the web. Once regarded as a virtual mood board, the company quickly pivoted to transform into a search and e-commerce powerhouse. Today, its primary revenue source is shopping ads and commissions from sales of merchant partner products on its platform.

The success of Pinterest’s e-commerce push was evident in its recent earnings report. Revenue rose 23% year-over-year (YOY), its fastest growth rate since 2021. Monthly active user growth remained strong, reaching 518 million at a 12% growth rate. Analysts celebrated the results, with several giving the stock a buy rating

Among the optimists was Piper Sandler that reiterated its faith in the stock, predicting a price upside of 19.49%. Other analysts echoed this sentiment with Loop Capital giving PINS stock a buy rating and a price target of $49. Citigroup gave the company a similar rating anticipating a price upside of $51. PINS stock is currently trading at $44. 

The market sentiments are reflective of Pinterest’s strong growth potential. Its ability to sustain user growth and expand the bottom line, makes this one of the top strong buy social media stocks on the market.

Spotify (SPOT)

Source: Fabio Principe / Shutterstock.com

Spotify (NYSE:SPOT) has revolutionized the world of music streaming services by leveraging a disruptive product and a “freemium” business model. It has since gown to a $62 billion valuation and amassed 615 million users globally. 

The company hopes to continue this upward trajectory by actively expanding its subscriber base and creating new avenues for advertising on its platform. In its efforts to drive this innovation, Spotify recently announced a hike in its membership prices. The news was well-received by analysts who praised the move. 

Morgan Stanley’s Benjamin Swinburne remains optimistic about the stock’s performance giving it a $370 price target. Also, Guggenheim analyst Michael Morris shares a similar sentiment and has maintained a buy rating on this stock since March 2023. He believes this move will help Spotify unlock underappreciated value and benefit from greater advertising revenue on its platform. 

Therefore, the company’s numerous growth opportunities and strong user base make it one of the top strong-buy social media stocks.

Meta Platforms (META)

Source: Blue Planet Studio / Shutterstock.com

Meta (NASDAQ:META) has seen unprecedented growth in the last decade and shows several signs of continuing its upward trajectory. The company’s strong growth history and technological innovations give analysts and investors ample reasons to stay bullish.

Ad generation, which remains META’s core revenue source, has experienced robust growth. It reports a 6% increase YOY at $35 million in its last quarter. Also, the company was quick to jump on the AI bandwagon. It quickly launched its AI assistant Meta AI and language model, the Meta Llama 3. These investments are expected to yield long-term returns for the company. 

Meta Platform’s diverse offering and strong market presence have led several analysts to rate the stock as a strong buy. Following Q1 earnings, Goldman Sachs’ Eric Sheridan maintained a buy rating on the stock. He remains confident in META’s leadership to navigate investment cycles despite short-term volatility. Further, billionaire investor Dan Loeb has touted Meta as one of his favorite growth stocks.  

Thus, the company’s strong user base and investments in AI make it one of the best strong buy social media stocks on the market right now. 

On the date of publication, Divya Premkumar did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Divya has a background in finance and accounting and has worked in FP&A roles at Fortune 500 companies. She is an avid reader and enjoys writing on a variety of topics including stocks, crypto, blockchain and global policy.

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