Social media stocks such as LinkedIn Corp (NYSE:LNKD), Facebook Inc (NASDAQ:FB) and Weibo Corp (ADR) (NASDAQ:WB) have not been performing as expected and there has been a dip recently for the bigger social stocks including Twitter Inc (NYSE:TWTR).
Gene Munster, Managing Director at Piper Jaffray was on CNBC yesterday and he said that the current movement in these social stocks has two reasons. The first reason is that these stocks such as LinkedIn Corp (NYSE:LNKD) and Facebook Inc (NASDAQ:FB) are high beta and high valuation stocks so when the market gets tense, it becomes harder for these stocks to perform. Second reason, according to Munster, is that the investors are not aware that these stocks are bound to earn on a longer period. So he feels that a combination of these reasons impacts the stocks.
“I think the combination of high beta plus a little bit of uncertainty from investors about the future result in these big impacts.” Munster summarized the reasons impacting the social stocks.
He said that LinkedIn Corp (NYSE:LNKD) is a stock that has got impacted a lot in the past 6 months. Munster mentioned about the new “sales solution” offering which is a light CRM application and it might become impactful in 2015. Though he feels that the new offering might become a catalyst for the growth, a lot of other investors don’t quite agree. He also said that monetizing Instagram and video would impact the stock of Facebook Inc (NASDAQ:FB) and there is an uncertainty about that in the market.
He thinks that stocks like LinkedIn Corp (NYSE:LNKD) and Weibo Corp (ADR) (NASDAQ:WB) are going to payoff well though there is a dip currently. So he said that investors focus more on Facebook Inc (NASDAQ:FB) and Twitter Inc (NYSE:TWTR) while they ignore potential stocks such as LinkedIn Corp (NYSE:LNKD) and Weibo Corp (ADR) (NASDAQ:WB).
Munsters said that the tech stocks get impacted during the summer and they typically do well in the second half of the year. So the social stocks such as LinkedIn Corp (NYSE:LNKD), Twitter Inc (NYSE:TWTR) or Facebook Inc (NASDAQ:FB) might perform well in the months to come and according to him owning these stocks before everyone rushes would actually help the investors.
“You need to own them before the rest of the investors show up for that. So you need to own them mid to late summer in anticipation of the fall run before the holidays.” Munster said.
He said that the stocks such as LinkedIn Corp (NYSE:LNKD) which have a pullback, provide buying opportunity and though this might not be the bottom, stocks like these always pay if the investor waits for 3 – 6 months.