We know two key things: (1) Yelp keeps delivering, driven by its local focus, and (2) Yahoo needs to turn around its core business, as the Alibaba halo will soon be lifted-and as trends could be decelerating there. CEO Marissa Meyer wants to focus on building out Yahoo's key verticals with a focus on people, products, traffic and monetization.
Yelp, up 35% year to date (it's only been just over one month!) and the social media cohort has been leading the way this year, with the exception of Twitter, because of their embrace of social, mobile and cloud.
Let us count the ways:
Facebook (FB - Get Report): Mobile crossed 50% of ad revenues, with mobile ad revenue crossing the $1 billion mark. Ad revenues accelerated for the sixth consecutive quarter, up 76% YoY vs up 66% last quarter. Key catalysts remain, including monetization of Instagram (where the teens are going! Remember, Facebook made this defensive acquisition for this reason), in-stream video ads, programmatic efforts including Facebook Exchange, and messenger. Facebook is up about 70% from its IPO debut of $38 in May 2012... and up 17% year to date as well... but its addressable market and monetization should lead it higher still.
LinkedIn (LNKD - Get Report): Investors were initially disappointed by LinkedIn's guidance, but this is a case where the company is investing in sales and product development including expansion in areas like China. Given its earlier stage, investors haven't given as much credit to this one versus investments from Amazon as they have in the last couple of years, but they should. After all, revenue was up 57% to $1.53 billion in 2013 and at the end of the fourth quarter cumulative membership grew 37% YoY to 277 million members. Mobile continues to gain momentum, now 41% of overall unique visitors. And engagement is strong, led by the new skill endorsements on the LinkedIn platform, content from though leaders, better infrastructure support, and integration of Pulse and LinkedIn Today. The stock is up about 365% since its IPO price of $45 in May 2011. And the recent pullback offers a compelling entry point.
And, yes, Twitter (TWTR - Get Report) ran too far too fast. And when user growth decelerated to 20% YoY from 34% YoY in the prior quarter, the fact that the company reported a strong quarter from financial metrics didn't matter. The valuation on this one leaves no room for deceleration-and what we need to see from this one is what Mark Zuckerberg offered at Facebook in the summer of 2013 when everyone was questioning mobile growth and monetization - he finally delivered and the stock hasn't looked back. We need to wait to see one quarter of improving metrics before coming in, but this is one to continue watching because it's not over yet. The company's importance will surely translate into monetization potential-we have seen this week alone with the Sochi Olympics how powerful Twitter can be. The stock is still a double from its IPO price so we need to hear more.
Even the dogs have turned around-Groupon (GRPN) is up 100% over the last year courtesy of new management and initiatives..
Even Google (GOOG) is trying to align itself more to its startup roots, emphasizing growth and innovation.
The bottom line: The winners right now? Yelp, Facebook, and Linked In. But overall the social media stocks, years after their debut in 2011-12, are leading the way and guiding the market in 2014. Keep a watch on Yelp, LinkedIn, Facebook... and Twitter too, because they reflect the excitement for group. And don't forget other names like HomeAway (AWAY), Priceline (PCLN), Pandora (P), TripAdvisor (TRIP), Zynga (ZNGA), and OpenTable (OPEN)
--Written by Nicole Urken in New York.
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