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Social Media Stocks: The 21st Century Technology Boom

The technology boom of the 21st century has changed the way we work and our leisure time. Whether you're keeping in touch with a friend, showing off the latest crafts, looking for love, or a good dentist, social media is a part of our lives today.

Entrepreneurs have sought to meet these needs, creating networks that connect us with family and friends, allow us to share interests and entertain, inform and amuse. More people than ever before have accounts on social media platforms like Instagram, Snapchat, Pinterest, Facebook and Twitter.
Naturally, this causes many users to think about trading and investing in companies that run this wide variety of social media platforms. Fortunately, in many cases they are following in the footsteps of legendary investor Warren Buffet, who is known to only invest in companies he understands.

Investors enter the battle for social media stocks

As the world approaches the 20th anniversary of the dotcom crash, investors see the social media arena very differently. In 2000, investors scrambled to embrace the new technology and the term "social media" was unknown. Companies with no sales and the most sketchy business plans saw their share prices rise based on clicks, customer counts, and disruption potential. Many of these speculative deals failed.
Winners have emerged and there is a steady stream of new entrants. Tech entrepreneurs have made huge sums of money in unprecedented industries, and tech stocks now dominate major stock exchanges. Facebook is one of the largest companies in the world with an enterprise value of more than $ 600 billion. With solid earnings and a stronger track record, investors can pick stocks based on more reliable metrics than they did at the turn of the century.
In contrast, some pioneers like MySpace, MSN Messenger and Bebo have disappeared. More recently, Alphabet has shut down the unsuccessful Google+. Even well-versed and well-funded companies have no guaranteed business success in social media companies.

Trade our social media share basket

These opposing fates pose a challenge for investors and traders. How can you capitalize on the potential opportunities these companies have while reducing the risks associated with failed business models?
Diversification is one of the most powerful risk management tools available to investors. Spreading it across multiple stocks reduces the overall impact if one fails. Another approach is to invest in established and larger companies - so-called blue chips.
Buying (or selling) a stock basket of high quality social media stocks combines these two risk mitigation techniques. The ability to do this in a single transaction is not only more convenient, it also reduces transaction fees.
Traders and investors can participate in 12 social media stocks such as Facebook, Twitter, Snap, Match Group Pinterest and Yelp via the CMC Social Media Share Basket. Many of these companies also manage risk through diversification. This means that the basket of social media stocks has a stake in the main businesses of these companies as well as their subsidiaries such as Instagram, Messenger, WhatsApp, Oculus, Periscope, Snapchat, OKCupid, Plenty of Fish, Hinge and Tinder.
The importance of social media for our daily life is made possible by the great leap in technology. Continuous technological innovations mean that online trading platforms can also offer individual and institutional investors greater choice and potential. With our social media stock basket, traders and investors can now trade technology they use every day.

Components in the social media basket

Alphabet Inc - Class A(10% weighting)

Google owner Alphabet owns the video-sharing phenomenon YouTube after Google paid $ 1.65 billion to acquire it in 2006.

Facebook (10% weighting)

The social networking giant Facebook was launched in 2004 and founded by Harvard University students, including Mark Zuckerberg.

Match Group(10% weighting)

The American Internet company Match, the pioneer of online dating, owns a number of well-known brands, including Hinge, OKCupid, Plenty of Fish, Tinder and Match.com.

InterActiveCorp (10% weighting)

InterActiveCorp (IAC) is a leading US media and internet company spanning more than 150 brands and products worldwide, including the video-sharing website Vimeo. It also has a majority stake in the Match Group, whose portfolio includes dating brands Tinder, Match, and Plenty of Fish.

Pinterest (10% weighting)

Introduced in 2010, Pinterest is a visual discovery tool that people can use to share ideas and find inspiration for different interests. Users can search for a topic they are interested in and pin an idea to their own board.

Twitter(10% weighting)

Founded in 2006, Twitter has become a hugely popular tool with 145 million daily active users who can communicate and interact with other users using up to 280 characters. The social media platform has become an increasingly popular source of breaking news.

Why might trading on social media be interesting for you?

The social media industry picked up speed in the 21st century. At the beginning of the century, numerous start-ups were founded that are now huge, well-known names, providing services to millions of people worldwide.
  • Traders and investors can trade with companies and technologies that they are familiar with and use on a daily basis
  • Social media are becoming more and more important in the daily life of people all over the world, made easier by the rapid advancement of technology
  • Continuous technological innovation also enables online trading platforms to offer a wider choice

Bearish point of view

  • Social media has at times received negative press because it has supported and enabled certain organizations to get their message across, such as right-wing extremist groups and terrorist organizations
  • Similarly, some social platforms have been criticized for not closing some accounts fast enough, and it remains to be seen whether certain forms of abuse such as racism and "trolling" can be completely eradicated
  • In addition, environmental problems in connection with the increasing global emissions caused by the operation of the Internet cannot be dismissed out of hand
  • A number of start-ups failed and fell by the wayside. there is still the possibility that certain groups of people will turn away from social media if they think that it is too annoying and monotonous

Trade stock baskets

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Find out more about the social media share basket


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