Pinterest has risen to become a social media success this year, impressively rallying to 87% throughout 2020. The platform has seamlessly topped its other competitors – Snapchat, Twitter, and Facebook – who are usually fighting for the top spot.
As of the beginning of August, Pinterest’s stock has dramatically sped up due to Pivotal and UBS upgrading the platform to a buy following uncontrollable earnings at the end of July.
Head of technical analysis at Oppenheimer, Ari Wald, suggested that Pinterest’s current momentum should act as part of a wider shift, which is better for social stocks.
He said: “We are bullish on that marketplace broadly – social media or, I ought to say seriously, technology. We assume we are in a technological innovation-led secular bull market.”
Wald claims that Facebook – the biggest member of the social media group – will bounce back and ride the wave higher than before.
“We are bullish on the title,” Wald claims. “The stock broke higher than two-year resistance dating again to 2018 in the latest months…the variety that the stock had been in the prior two years helped what was previously overbought excesses to recede.”
Wald acknowledges a two-year rate of change in the charts, which currently stands at 40% but was as big as 95% three years ago. He explains: “here is a stock that has price momentum in a broadly strong group.”
As of this week, Facebook has seen a 1.1% decrease in shares.
Managing Director of FX Strategy at BK Asset Management, Boris Schlossberg, also backs Facebook.
He says: “Facebook is the trade because I think it’s very much a winner-takes-all social media industry, and Facebook just has such a dominant position and such a captured audience.”
Saying this, Schlossberg also recognises Twitter’s potential, despite its 23% decline in ad revenue, which was reported towards the end of July 2020.
Schlossberg says, “Twitter actually came out with terrible numbers. It’s been unable to monetise users, but its user base is rising. More importantly, it’s completely non-copyable. Facebook cannot copy Twitter. And for that reason, I think Twitter could be a takeout candidate going forward.”