Patient investors are often rewarded when they decide not to jump on the bandwagon into stocks that go public for the first time, otherwise called an initial public offering (IPO).
During an IPO, the odds are that the price investors hope for will not be achieved due to the sheer volume of traders trying to buy at the IPO price, driving it ever higher.
However, patience may well pay off as many IPOs struggle after the initial hype, and shares often times trade much lower, offering a potential solid entry. Currently, such a trend has caught up with social media companies, where most of them are trading below their IPO price.
Thus, Finbold has identified three social media stocks trading below their IPO price, which are worth keeping an eye on.
Pinterest (NYSE: PINS)
This social media site thrives on visual sharing, searches, and discovery, creating a platform for users to share their interests through images. More recently, the firm sought to grow by partnering with e-commerce sites, such as the partnership with WooCommerce, connecting Pinterest’s over 400 million monthly active users with the merchants.
PINS has been trading in the $16.77 to $21.68 range in the last month, with a negative long-term trend. Meanwhile, the resistance line is located at $19.67, and the support line is at $18.11
TipRanks analysts rate the shares as a hold, seeing the average price in the next 12 months reaching $24.16, 25.83% higher than the current trading price of $19.20.
Snapchat (NYSE: SNAP)
Despite the stock losing almost 40% since it announced its earnings, the management of the company believes that it can grow sales at a continuous clip despite the headwinds experienced by tech stocks and social media stocks in general.
Previous revenue growth could indicate that the company can achieve its goals; however, more aggressive investors can find more value in this beaten-down social media stock.
Both the long-term and short-term trends for the stock are negative, while in the last month, SNAP has been trading between $9.38 and $16.55. Further, the resistance is now moved to $13.81, while the support line is at $8.66.
Meanwhile, on Wall Street, analysts agree that the stock is a ‘hold’ with average price predictions for the next 12 months at $14.93, 56.34% higher than the current trading price of $9.55.
Twitter (NYSE: TWTR)
The microblogging social media platform has been in the news lately, with Tesla (NASDAQ: TSLA) CEO Elon Musk stating that he wanted to buy the company, to then try and pull out of the deal.
Regardless, the return of sports and previously delayed products and events due to Covid, is now favoring the advertising revenues of Twitter. Furthermore, the firm has announced more monetizable products, such as Super Follows, which are expected to bring in more sales.
The short-term trend for the stock is positive, as it traded between $32.52 and $40.50 over the last month. Meanwhile, the support zone formed between $38.93 and $39.63, while the resistance zone is between $39.86 and $40.17.
Analysts rate the shares a hold, predicting that the average share price in the next 12 months could reach $41.56, 4.29% higher than the current trading price of $39.85.
Despite social media and ad tech stocks falling over the last month, the fact that the three above are below their IPO price could indicate that a solid entry position has finally come about.
Patient investors could benefit from investing in these names; however, a larger risk appetite is needed as there could be more volatility in these stocks in the short term.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.