There’s an unexpected social media star this year.
Pinterest has rallied 87% in 2020, easily topping Facebook, Snap and Twitter. The stock has gained speed in recent days after UBS and Pivotal upgraded it to a buy after blowout earnings last Thursday.
Ari Wald, head of technical analysis at Oppenheimer, said Pinterest’s momentum rally should provide more gains as part of a broader move higher for social stocks.
“We’re bullish on that industry broadly – social media or, I should say really, technology,” Wald said on Tuesday on CNBC’s “Trading Nation.” “We think we are in a technology-led secular bull market.”
Wald is sticking with the largest of the group – Facebook – to ride the wave higher.
“We’re bullish on the name,” he said. “The stock broke above two-year resistance dating back to 2018 in recent months. … The range that the stock had been in the prior two years helped what was previously overbought excesses to recede.”
He points to a two-year rate of change in the charts which was as high as 95% in 2017, and now stands at approximately 40%.
The stock is “not yet to the overbought range that has marked overbought in the stock’s history so we still see room to run. Here’s a stock that has price momentum in a broadly strong group,” Wald said.
Shares in Facebook were down 1.1% midday Tuesday.
Facebook has another fan in Boris Schlossberg, managing director of FX strategy at BK Asset Management.
“Facebook is the trade because I think it’s very much a winner-takes-all social media industry, and Facebook just has such a dominant position and such a captured audience,” Schlossberg said during the same “Trading Nation” segment.
However, he does see potential in Twitter’s unique offering.
“Twitter actually came out with terrible numbers. It’s been unable to monetize users, but its user base is rising. And most importantly, it’s completely noncopyable. Facebook cannot copy Twitter. And for that reason, I think Twitter could be very much a takeout candidate going forward. Its content model is just so compelling that somebody’s going to figure out how to make money with it,” Schlossberg said.
Twitter reported a 23% decline in ad revenue for its second quarter, which it reported July 23.
Shares in Twitter were slightly lower on Tuesday after the company said it expects to be fined as much as $250 million by the Federal Trade Commission on the grounds it failed to protect user information in 2011.