We’ve seen and expect social media and mobile smartphone usage increase in the near and long-term. How does an investor capitalize on this trend? What companies are in a position to thrive in the coming months and years?
As I’ve stated before, these companies carry a significant amount of risk because of the ever changing technologies that enable social media and smartphones to function. Five years ago most people would have laughed at you if you told them Facebook would destroy Myspace and take over the social media world. Yet, this is exactly what happened, and can happen at any level of such an emerging industry.
So how do you get in on the social/mobile revolution? I’ve come up with a handful of stocks that I feel are a good way in which to gain significant exposure to the trends driving social and mobile media. One group is for the more aggressive investor and the other is for the more conservative investor.
QuePasa (QPSA) – QPSA is a social networking site that is growing rapidly in emerging markets, it has been able to establish advertising contracts with major advertising companies and it is in the process of implementing skill based games (a soft form of gambling) as part of it’s social network offering.
Glu Mobile (GLUU) – This is a pure-play on mobile/social gaming. GLUU has a wide offering of in-house developed games and licensed games. It has experienced significant growth and has recently signed agreements with Nvidia and Google to have their games incorporated into the Android platform. It is building a potential wealth machine off of mico-transaction gaming.
Augme Technologies (AUGT) – The company offers AD LIFE mobile marketing technology platform that allows marketers, brands, and agencies the ability to plan, create, test, deploy, and track mobile marketing programs. In the past few months they’ve gone from a couple Fortune 500 companies to over 25.
Sky-Mobi (MOBI) – MOBI works with handset companies to pre-install its Maopao mobile application store on handsets and with content developers to provide users with applications and content titles. It’s a Chinese based company that had its IPO on the Nasdaq exchange in late 2010.
Akam (AKAM) – AKAM provides services for accelerating and improving the delivery of content and applications over the Internet in the U.S and internationally. As of a couple years ago AKAM supported seven of the top 10 most trafficked social networking sites and 92% of social networking site visits in the U.S. No one wants their content loading slow, which is why AKAM is so important to social, mobile and general Internet growth.
Less Aggressive picks:
Qualcomm (QCOM) – QCOM has greatly benefited from its intellectual property portfolio pertaining to the manufacture and sale of wireless products. It will continue to do so in the coming years. Recently QCOM acquired Atheros (ATHR) for $3.2 billion in an effort to diversify its product portfolio This acquisition will give QCOM a tremendous opportunity to leverage Atheros’ Wi-Fi technology capability in non-handset devices.
Verizon (VZ) – A strong dividend, great wireless network and a broad offering of mobile devices. This is VZ. If you’re looking for a value play with growth potential in this arena, then VZ must be on your radar. It has the potential to gain significant market share as phone usage increase and it attracts defectors from competitors.
Cisco Systems (CSCO) – When Internet usage increases, routers, storage networks and other computer equipment is necessary. As more and more people are online in more and more varied ways, more routers, bridges and gateways are needed to ensure that traffic gets from A to B in a timely manner. When the Internet grows CSCO grows.
Google (GOOG) – Last year Google acquired 11 social media companies, it has made significant in-roads with its Android platform. Google knows that to continue its success it must position itself to capitalize on social media ad revenue. I wouldn’t bet against them.
Electronic Arts (ERTS) – Last year ERTS paid $275 million for social gaming company Playfish. At that time, Playfish was the second most popular game producer on Facebook, with more than 60 million active monthly players. Electronic Arts is now the second-largest on Facebook (behind leader Zynga). ERTS understands the future of gaming and has put a significant push towards capturing the mobile and social gaming market.
Disclosure: Long QPSA, AUGT