3 Social Media Stocks to Sell in August Before They Crash and Burn

Investing in social media stocks might seem like a no-brainer. The size of the social media market was $219.06 billion in 2023, and by the end of 2028, it is expected to nearly double. It reveals that the social media market has a compound annual growth rate (CAGR) of 13.2% during that period. So it makes sense to invest in social media stocks right now in hopes of big returns in the future, right? Well, the reality is much more nuanced than that.

Because social media is a rapidly growing market, investors must be ready to adapt to the latest changes and leaders. This means that the current top players may not be the leaders in a few years, given how quickly people want changes to be made in social media. Many of the existing social media platforms are overrated and show no signs of surviving stiff competition. Below are the three social media stocks to sell this month before they crash and burn.

Trump Media & Technology Group (DJT)

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In principle, any business with a person’s name attached involves a premium risk. The company might thrive when the public likes the figure, but if it is the focus of criticism, it has a ripple effect on the company and hurts the business. This is especially true if the figure tends to be political or controversial.

Trump Media & Technology Group (NASDAQ:DJT) is just that, but there are more nuanced reasons why investors should sell the stock. First, former President Trump is starting to use other social media platforms again. Earlier this week, the former president returned to X for the first time in a year and shared several posts promoting his campaign. Moreover, the platform is simply too small compared to its competitors, and its growth potential is limited to people who align with Mr. Trump’s political views.

Without being political, the Trump Media & Technology Group investment is too dependent on the former president himself and the outcome of the upcoming presidential election, which is why I’m selling it.

Match Group (MTCH)

Source: T. Schneider / Shutterstock

The next stock on this list is Match group (NASDAQ:MTCH), owner of major dating apps like Tinder, Match.com, Hinge, and more. These dating apps have dominated the online dating platform market for years, and the upside for MTCH isn’t great. Other competitors in the market, such as Hinge and niche dating apps such as Grindr, are already beginning to take away MTCH’s market share.

In addition to changing consumer preferences, data shows that Americans are spending less on subscriptions for premium app features. Last month, Match Group announced plans to lay off 6% of current employees due to slower growth and declining subscription users. Match Group is struggling amid growing competition, and while Tinder is the biggest dating app player on the market right now, we don’t know how long it will stay that way.

Rumble (RMB)

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rumble (NASDAQ:RMBL) is another that social media investors should be skeptical of. It advertises and prides itself on being the free expression alternative to YouTube, where users can more freely post, share and watch videos without strict censorship.

The first major issue with Rumble concerns monthly active users (MAUs). While the number increased from 50 million in the first quarter to 53 million in the second quarter, it is still largely below the 67 million MAUs just two quarters ago.

Besides a sharp drop in MAU, another problem is the geographical distribution of its users. Of the 53 million MAUs, nearly 70% of them were from the US and Canada, and this was a consistent pattern even when the numbers were high. This could signal a potential problem, as Rumble can only attract users from certain geographic locations, limiting its growth potential. This is largely due to other Western governments such as Australia, Brazil, France, and New Zealand wanting to censor Rumble content, indicating that Rumble will not be able to attract international users for a while.

As of the date of publication, Andy Kim did not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to InvestorPlace.com Publishing Guide.

At the time of publication, the responsible editor had (either directly or indirectly) no position in the securities mentioned in this article.