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Social Media Influencer Stocks are Changing the Game (NASDAQ: FB) (OTC: ENGMF) (OTC: TONJ) (NYSE: SNAP)

The social media influencer space is the future of marketing and branding, a fact made very clear by the recent story of Kylie Cosmetics, a cosmetics brand started by Kylie Jenner, one of the most successful social media influencers on the planet. Kylie Cosmetics was valued at nearly $1.2 billion when it sold a controlling stake to Coty, Inc. last November. That value was built by first cultivating a broad influencer following.

The traditional model generally has revolved around trying to come up with a successful product and then figuring out how to market it effectively. But the new model emerging in recent years reverses the process: establish a huge reach with an interested audience, and then come up with products to sell them.

As a result, the social influencer marketplace has exploded to life as branding budgets flood into the space. According to Business Insider, brands are estimated to spend up to $15 billion on influencer marketing by 2022: “As social media becomes more entrenched in people’s lives and takes on more functional uses beyond communication, like shopping, the role of influencers is set to only grow. And as e-commerce and social media converge, influencers will become increasingly vital intermediaries, helping to connect brands with consumers on social media in highly resonant, authentic ways that can deliver immediate returns.”

As noted by Statista, the global Instagram influencer market is expected to grow from $1.3 billion to nearly twice that amount this year.

That has led to a recent run in stocks positioned to capitalize on this longer-term trend. With that in mind, we take a look at some of the more interesting names in the space, including Facebook Inc. Common Stock (NASDAQ:FB), Enthusiast Gaming Holdings Inc. (OTCMKTS:ENGMF), Tongji Healthcare Group Inc. (OTCMKTS:TONJ), and Snap Inc. (NYSE:SNAP).

 

Facebook Inc. Common Stock (NASDAQ: FB) provides various products to connect and share through mobile devices, personal computers, and other surfaces worldwide as one of the most visible and well-known megacap stocks in the world.

Its products include Facebook Website and mobile application that enables people to connect, share, discover, and communicate with each other on mobile devices and personal computers; Instagram, a community for sharing visual stories through photos, videos, and direct messages; Messenger, a messaging application to communicate with other people, groups, and businesses across various platforms and devices; and WhatsApp, a mobile messaging application.

Facebook Inc. Common Stock (NASDAQ: FB) most recently announced its financial results for the quarter ended September 30, 2020, which featured daily active users (DAUs) of 1.82 billion on average for September 2020, an increase of 12% year-over-year, monthly active users (MAUs) of 2.74 billion as of September 30, 2020, an increase of 12% year-over-year, and daily active people (DAP) of 2.54 billion on average for September 2020, an increase of 15% year-over-year.

“We had a strong quarter as people and businesses continue to rely on our services to stay connected and create economic opportunity during these tough times,” said Mark Zuckerberg, Facebook founder and CEO. “We continue to make significant investments in our products and hiring in order to deliver new and meaningful experiences for our community around the world.”

Even with that news, the action hasn’t really heated up in the stock, with shares moving net sideways over the past week. FB shares have been relatively flat over the past month of action, with very little net movement during that period.

Facebook Inc. Common Stock (NASDAQ: FB) pulled in sales of $21.5B in its last reported quarterly financials, representing top line growth of 21.6%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($55.8B against $11.9B).

 

Enthusiast Gaming Holdings Inc. (OTCMKTS: ENGMF) frames itself as a company building the world’s largest social network of communities for gamers and esports fans that reaches over 300 million gaming enthusiasts on a monthly basis.

Already the largest gaming platform in North America and the United Kingdom, the Company’s business is comprised of four main pillars: Esports, Content, Talent and Entertainment. Enthusiast Gaming’s esports division, Luminosity Gaming, is a leading global esports franchise that consists of 7 professional esports teams under ownership and management, including the Vancouver Titans Overwatch team and the Seattle Surge Call of Duty team.

Enthusiast Gaming Holdings Inc. (OTCMKTS: ENGMF) most recently announced that it has observed significant growth across a number of key metrics during Black Friday Week, representing the seven-day period from November 24 – 30, 2020, as compared to the corresponding period in 2019 (November 26 – December 2, 2019). According to the release, the company saw 36% growth of total advertising revenue, including programmatic advertising revenue growth of 28%, 12% increase in site views, resulting in nearly 800 million web and video content views in one week, and an additional 2,000 paid subscribers added to the Company’s web properties, representing an approximately 2% increase in monthly recurring subscribers gained in one week

“More and more brands are realizing the untapped value of our gaming and esports platform as an ideal advertising and engagement method to reach the Gen Z and millennial audiences,” said Adrian Montgomery, CEO of Enthusiast Gaming. “We are seeing strong growing numbers across our various segments which is a testament to the investments and strategic decisions we undertook during the past year including in ad tech, direct sales, content and distribution. We remain excited and confident about our growth trajectory.”

And the stock has been acting well over recent days, up something like 13% in that time.

Enthusiast Gaming Holdings Inc. (OTCMKTS: ENGMF) generated sales of $16.3M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 132.3% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($8.7M against $22.3M, respectively).

 

Tongji Healthcare Group Inc. (OTCMKTS: TONJ) is in the process of changing its name to “Clubhouse Media Group” following its acquisition of West of Hudson Group Inc., the sole owner of “The Clubhouse,” a collection of scenic mansions in Southern California that house some of the most prominent and widely followed social media influencers, together carrying an estimated follower base in excess of 90 million. The acquisition closed on Nov. 12, 2020.

The Clubhouse is an established network of three social media content creation houses (“Clubhouse BH,” “Clubhouse Europe,” and “Not a Content House”) that has already received organic media coverage from the New York Times, The Atlantic, Business Insider and Forbes. As a result of the acquisition, the Company also acquired West of Hudson Group Inc.’s two operating subsidiaries: WOH Brands, LLC, a content-creation studio, social media marketing company, technology developer, and brand incubator; and Doiyen, LLC, a talent management company that provides representation to Clubhouse influencers.

Tongji Healthcare Group In.c (OTCMKTS: TONJ) just announced this morning the signing of a Definitive Agreement to acquire Magiclytics, one of the world’s first Influencer-Based Marketing Revenue Prediction Software platforms.

“Magiclytics solves one of the largest problems in Influencer-based Marketing,” commented Amir Ben Yohanan, CEO at Tongji. “Brands lack visibility into return potential when investing in influencer-based marketing campaigns. Without visibility, strategic decisions end up being left to coin-toss analytics. But Magiclytics provides that visibility through machine learning and artificial intelligence to provide a guide when trying to determine which influencers to bring into the equation and how much of the market a particular brand can hope to access through the strategy.”

According to the release, Magiclytics currently predicts return on investment on both the Instagram and TikTok platforms. Through advanced analytics, machine learning and AI, the Magiclytics platform is designed to allow brands to identify which influencers to work with and to provide guidance on revenue generation potential through influencer campaigns. The Company anticipates the addition of Magiclytics will help its current brand deals become more scalable and efficient as well as add an additional source of revenue to the Company.

 

Snap Inc. (NYSE: SNAP) offers Snapchat, a camera application that helps people to communicate through short videos and images.

It also provides Camera, a tool to personalize and add context to Snaps; Friends Page that allows to creating and watching stories, chatting with groups, making voice and video calls, and communicating through a range of contextual stickers and Bitmojis; and Discover that helps to surface the most interesting stories from publishers, creators, and the community, based on a user’s subscriptions and interests.

Snap Inc. (NYSE: SNAP) most recently announced Spotlight, a new entertainment platform for user-generated content within Snapchat. Spotlight will surface the most entertaining Snaps from the Snapchat community all in one place, and will become tailored to each Snapchatter over time based on their preferences and favorites.

According to the release, Spotlight was designed to entertain the Snapchat community while living up to Snapchat’s values, with their wellbeing as a top priority. Spotlight content is moderated and doesn’t allow for public comments. Snaps submitted to Spotlight must respect our content guidelines to receive distribution. Spotlight is available in the US, Canada, Australia, New Zealand, the UK, Ireland, Norway, Sweden, Denmark, Germany, France, with more countries to come soon.

If you’re long this stock, then you’re liking how the stock has responded to the announcement. SNAP shares have been moving higher over the past week overall, pushing about 12% to the upside on above average trading volume.

Snap Inc. (NYSE: SNAP) pulled in sales of $678.7M in its last reported quarterly financials, representing top line growth of 52.1%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($2.7B against $610.1M).

 

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