WhatsApp Doc?

Written by GSCR Staff   
Friday, 21 February 2014 09:33

On a side note, it is a scary thought that today’s headline is becoming a dated cultural reference!  But, we digress…

Earlier this week Facebook (NASDAQ – FB) purchased WhatsApp for $19 billion and immediately there was a lot of buzz around the social media space.  In what appears to be a little more of a sideways market for 2014, stock picking in active sectors will be key in attaining premium returns.  Today, we decided to take a look at some of our old Market Monitor picks in the social media sector.

A little over a year ago we liked Zynga, Inc. (NASDAQ – ZNGA) at $2.69 and it is now at $5.09.  That is nearly a 90% rise in price level over the past year.  ZNGA is one of those stocks that has benefited tremendously from M&A activity from FB over the past year as the smart money thinks it’s the next one to go.  On the micro level the stock looks great and is very bullish related to all durations of the Daily Moving Average.  On the macro level, the Company continues to develop and release new products to grow the revenue base.  Earlier this month, Riches of Olympus was released which expands the social media casino line for the firm.  We say this one is a keeper and $7.00 by sometime in the second quarter is possible.

MeetMe, Inc. (NASDAQ – MEET - $2.69) was featured in late September and is currently up nearly 52% since then.  To say that the WhatsApp/Facebook deal benefited MEET is the understatement of the week.  The stock jumped 10% yesterday alone!   Like ZNGA, the technical analysis for the stock is very bullish in all metrics.  The real question is will the Company be able to monetize its product?  Analysts’ consensus has the firm at right about break-even for EPS for the 2014 FY on a 15% revenue increase over 2013.  This is a good sign.  The news for the MeetMe products has also been great for momentum.  In mid-January the Company’s Choosy app was ranked the #1 top new social app and 29th overall social app in Google Play Store.   MEET is definitely a keeper too and could see another price level increase of 25% over the next two or three months, especially if FB continues its shopping spree.

Have a great weekend!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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