Technology

Social Media Stocks' Slump Not Yet Over

Social Media
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So far 2014 has not treated social media stocks very well. Among the big cap stocks, only Facebook Inc. (NASDAQ: FB) has seen a gain year-to-date, and that gain is just 2.5%. The momentum for social media stocks may not have died completely, but it has certainly slowed down. Here is a look as some of the more notable players.

Twitter Inc. (NYSE: TWTR) reports first-quarter earnings after markets close Tuesday. The current consensus estimates from Thomson Reuters call for an earnings per share (EPS) loss of $0.03 on revenues of $241.47 million. Shares have dropped 36% year-to-date, while the stock’s forward price to earnings (P/E) ratio is at the nosebleed level of 186.36. The big question about Twitter is whether it can continue to grow its user numbers. In our preview of Twitter’s results, we noted one analyst who thinks it can.

LinkedIn Corp. (NYSE: LNKD) is down nearly 32% year-to-date, and its forward P/E ratio has settled at just under 60. Its trailing P/E is a whopping 663. The professional networking company reports first-quarter earnings on Thursday and is expected to post EPS of $0.34 on revenues of $466.7 million. That would be a drop of 24% in profits on a 44% rise in revenues. LinkedIn continues investing in growth, but it appears to be elusive.

Yelp Inc. (NYSE: YELP), the local guide to businesses, is down nearly 20% year-to-date, and analysts expect the company to report a net loss of $0.08 per share on revenues of $75.06 million on Wednesday. That is a $0.02 improvement in loss per share on an estimated 63% improvement in revenues. Yelp’s forward P/E ratio is nearly 150, and the company is not expected to post positive earnings until next fiscal year.

Among the social game makers, Zynga Inc. (NASDAQ: ZNGA) has posted share price growth of 2.6% so far in 2014. Zynga posted a first-quarter loss of $0.01 per share, as expected, and is projected to have a break-even second quarter. Its forward P/E is around 66, even though the company has never posted positive earnings.

Glu Mobile Inc. (NASDAQ: GLUU) has put up a gain of less than 1% since the beginning of the year and is expected to post EPS of $0.02 for the first quarter when the company reports earnings tomorrow. Glu’s forward P/E is a more down-to-earth 27.64, after breaking even in the fourth quarter for the first time.

Newly public King Digital Entertainment PLC (NYSE: KING) is down more than 7.5% since its late March IPO. The maker of the smash hit Candy Crush Saga game reports earnings for the first time on May 7, and there are no published estimates yet. At its IPO price of $22.50 a share the game-maker’s market value was around $7.1 billion, compared with $5.34 billion today.

The name of the game for these companies is growth, and with growth comes the positive momentum that drives stock prices. Analysts and investors are not seeing a lot of growth and that is punishing the shares. The thing to remember about momentum, though, is that it can return as quickly as it goes missing.

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