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What Investors Need to Know About Social Media Stocks

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  • (0:15) - Social Media Stocks: Regulatory Concerns
  • (2:15) - Data Leak Impact On Facebook
  • (15:00) - Should You Be Investing In Facebook, Twitter or Snapchat?
  • (21:10) - Chinese Internet Stocks
  • (28:00) - Episode Roundup:

Welcome to Episode #127 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

In this episode, Tracey is joined by Ryan McQueeney, Zacks Associate Stock Strategist, to discuss the social media stocks.

Should You Buy Facebook, Twitter or Snap?

With Facebook (FB - Free Report) facing the hot seat over its privacy policies and the use of its data, it brings up questions that all investors should be asking: what will be the impact on the companies and should I be investing in them?

Facebook, don’t forget, isn’t a one-hit wonder. It also owns Instagram, which is nearing a billion users worldwide.

According to a recent article by Bloomberg Businessweek, Instagram now generates about 18% of Facebook’s revenue.

Similar privacy and revenue questions could face the other big social media companies like Twitter (TWTR - Free Report) and Snap (SNAP - Free Report) .

Chinese Social Media Companies Have Problems Too

But the question isn’t just limited to the American social media companies.

Recently, in China, Bytedance’s joke sharing app was suddenly shut down by the Chinese government leaving millions of users without recourse. The company is also facing a fine.

Bytedance has a $20 billion market cap and is considered one of the Internet unicorns so it’s not exactly a small player in the space.

Weibo (WB - Free Report) , China’s equivalent to Twitter, recently had to shut down a hashtag as the government was cracking down on gay content on the social media sites. But after facing a social backlash, the government decided to re-institute its use.

What does this mean for the other social media giants like Tencent (TCEHY - Free Report) which owns WeChat, which is China’s equivalent to Facebook? Will it face more intense scrutiny as well?

Most of the Chinese Internet stocks sold off on this news.

Should American investors be leery of investing in Chinese social media stocks right now with uncertainty in the air?

Should investors avoid the whole sector?

Find out the answers to these questions and more on this week’s podcast.

[In full disclosure, Tracey owns shares of FB and TCEHY in her personal portfolio.]

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