One of the hottest growth sectors out there is social media. With Twitter's (TWTR) IPO creating a new $25 billion company, and Facebook's (FB) valuation nearing $150 billion, it's clear that this industry is here to stay. And, during last year's huge stock market run, social media stocks were among the big winners. The Global X Social Media ETF (SOCL) is up over 55 percent since mid-November of last year.
But is it possible that we're currently in a social media bubble? Is the market's current obsession with social media stocks just a repeat of its obsession with the internet in the late 1990s?
Veritasium is an educational science channel on YouTube that produced a video that might strike at the heart of why social media stocks could be due for a fall. It takes a closer look at the "likes" on Facebook and questions just how many are legitimately in the target audience for people paying to market on Facebook. If advertising on social media gradually demonstrates a lack of results, it's likely to undercut the valuations that exist today and prevent these companies from the sort of doubling and tripling of revenue figures they need to get to to justify their current price.
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