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Facebook (Nasdaq: FB) is one of many social media stocks that didn't begin well. After its initial public offering (IPO), FB stock failed to garner any real momentum for the first several months, and even dipped below $20 per share in late 2012.
However, FB stock has since surged. It's up almost 60% since its IPO, and more than 10% this year alone. Investors have nabbed a 140% return over the last nine months.
But not all social media stocks have experienced such a miraculous turnaround.
Here's a look at two social media stocks we don't think are capable of reversal…
Don't Buy These Social Media Stocks
Twitter Inc. (NYSE: TWTR) went public on Nov. 7, 2013. The microblogging company's initial offering price of $26 popped to reach $45.10 at opening bell that day – a 73% increase. It reached an intraday high of $55.09 before closing up 72.7% at $44.90. In late December, TWTR stock reached its all-time high of $74.73 per share, up 63.27% from its public debut.
But this social media stock's good news ends there.
Shares took a 13% plunge on Dec. 27 in its second biggest one-day drop. A downgrade to "Sell" by Macquarie Equity research analyst Ben Schachter on Friday was the likely culprit. The stock opened at $72 per share and closed at $63.75. "Nothing has changed in the fundamentals to justify the sharp rise," Schachter told clients.
Then on Feb. 6, TWTR stock experienced its largest one-day drop, closing with a 24.56% plunge the day after it released its first-ever earnings.
Two troubling numbers triggered the sell-off – timeline views and slowing user growth. The numbers remain troubling to this day, landing Twitter on our list of social media stocks not to buy.
The Internet giant Twitter isn't the only social media stock wise investors should avoid.