Social Stocks Are Just Getting Started ($FB, $LNKD, $TRIP)

By: ispeculatornew
Date posted: 07.25.2013 (3:00 am) | Write a Comment  (3 Comments)

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FBLogoThis is not the first or the last time that I comment on social stocks but to give some context to newer readers, I’ve been a big believer in these stocks because of their ability to be “sticky” and provide unique content that is very difficult to compete with. Facebook (FB) and LinkedIn (LNKD) are the two clear social plays. One of main arguments all along has been while the market has looked at these stocks as advertising plays only, they have the ability to become much more.

LinkedIn was very early to start working on such solutions which might be easier to see given its niche. It offers premium products to both individual and corporate users. I personally think there are many other possibilities (consulting, data, etc) that are within LinkedIn’s possibilities. Facebook has not been as quick and I complained about it recently. Just today, I tweeted (@intelligentspec) an interesting article about Facebook’s failure to become a platform. Of course, that is one perspective and it’s very easy to call the shots. One such example of course is TripAdvisor (TRIP) which reported very solid numbers today. Another would be Zynga (ZNGA). It has been able to successfully build on top of Facebook in a way that benefits both parties. Tripadvisor faces very little competition in it is increasingly expanding its revenues away from “display ads”.

ycharts_chart

Why? Because in all of these companies, users are finding value that is not available elsewhere and it keeps getting better as users interact with each and the rest of the content. Companies such as Monster Worldwide (MWW), Priceline (PCLN) and Yahoo (YHOO) don’t compete well in that regard.

It’s Never Been About The Users

I’ve complained over and over that looking at Facebook’s potential growth in terms of users is flawed. Yes, it’s important to have user growth (both in terms of new users and existing ones connecting and spending more time) but that is not where the revenues/profits will come from. It is only a measure of health to ensure that the company won’t turn into the next MySpace. Given its size, Facebook’s growth remains very strong at 1.15B monthly active users (21% increase).

dailyusers

It’s About The Future Projects

LinkedIn has already been fairly clear in where it’s headed (premium offerings, etc) while TripAdvisor is already building strong relationships with booking agents such as Expedia (EXPE) and could eventually start booking on its own. Facebook is a lot less clear because it is the “default” social standard. Yes, it faces competition from Google but it remains the dominant player and could end up getting more involved in payments, ecommerce, build alliances with the next TripAdvisor, etc. That all remains to be seen. Deeper integration (an excellent example of this here) will be key in adding value to users and advertisers.

So yes, I will continue to hold on to Facebook and a few other social stocks…what are your thoughts?

Disclosure: Long Facebook (FB), TripAdvisor (TRIP)

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3 Comments

  1. Comment by Johan Lindén — July 25, 2013 @ 9:22 am

    Aren’t you also long Trip?

  2. Comment by IS — July 25, 2013 @ 9:28 am

    Yes, you are right, will correct this

  3. […] 5. Social Stocks Are Just Getting Started ($FB, $LNKD, $TRIP) @ IS. […]

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