The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Snap (NYSE: SNAP) and the rest of the social networking stocks fared in Q3.

Businesses must meet their customers where they are, which over the past decade has come to mean on social networks. In 2020, users spent over 2.5 hours a day on social networks, a figure that has increased every year since measurement began. As a result, businesses continue to shift their advertising and marketing dollars online.

The 5 social networking stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.6% while next quarter’s revenue guidance was 0.9% below.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 6.2% since the latest earnings results.

Snap (NYSE: SNAP)

Founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, and originally called Picaboo, Snapchat (NYSE: SNAP) is an image centric social media network.

Snap reported revenues of $1.51 billion, up 9.8% year on year. This print exceeded analysts’ expectations by 1%. Overall, it was a strong quarter for the company with a solid beat of analysts’ EBITDA estimates and a narrow beat of analysts’ revenue estimates.

“Our focus on performance, creativity, and simplicity is helping advertisers achieve stronger results while giving our community more ways to communicate,” said Evan Spiegel, CEO.

Interestingly, the stock is up 4.1% since reporting and currently trades at $7.66.

Is now the time to buy Snap? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Reddit (NYSE: RDDT)

Founded in 2005 by two University of Virginia roommates, Reddit (NYSE: RDDT) facilitates user-generated content across niche communities (called subreddits) that discuss anything from stocks to dating and memes.

Reddit reported revenues of $584.9 million, up 67.9% year on year, outperforming analysts’ expectations by 6.3%. The business had a very strong quarter with EBITDA guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.

Reddit scored the biggest analyst estimates beat and fastest revenue growth among its peers. The company reported 51.6 million daily active users, up 7.1% year on year. The market seems happy with the results as the stock is up 11.9% since reporting. It currently trades at $217.73.

Is now the time to buy Reddit? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Pinterest (NYSE: PINS)

Created with the idea of virtually replacing paper catalogues, Pinterest (NYSE: PINS) is an online image and social discovery platform.

Pinterest reported revenues of $1.05 billion, up 16.8% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted a solid beat of analysts’ EBITDA estimates but revenue guidance for next quarter slightly missing analysts’ expectations.

Pinterest delivered the weakest performance against analyst estimates in the group. The company reported 600 million monthly active users, up 11.7% year on year. As expected, the stock is down 22.9% since the results and currently trades at $25.46.

Read our full analysis of Pinterest’s results here.

Yelp (NYSE: YELP)

Founded by PayPal alumni Jeremy Stoppelman and Russel Simmons, Yelp (NYSE: YELP) is an online platform that helps people discover local businesses through crowd-sourced reviews.

Yelp reported revenues of $376 million, up 4.4% year on year. This print beat analysts’ expectations by 2.1%. It was a strong quarter as it also logged an impressive beat of analysts’ EBITDA estimates and full-year EBITDA guidance slightly topping analysts’ expectations.

Yelp had the slowest revenue growth among its peers. The stock is down 8.5% since reporting and currently trades at $29.39.

Read our full, actionable report on Yelp here, it’s free for active Edge members.

Meta (NASDAQ: META)

Famously founded by Mark Zuckerberg in his Harvard dorm, Meta Platforms (NASDAQ: META) operates a collection of the largest social networks in the world - Facebook, Instagram, WhatsApp, and Messenger, along with its metaverse focused Reality Labs.

Meta reported revenues of $51.24 billion, up 26.2% year on year. This number topped analysts’ expectations by 3.4%. Overall, it was a strong quarter as it also produced an impressive beat of analysts’ EBITDA estimates and a decent beat of analysts’ revenue estimates.

The company reported 3.54 billion daily active users, up 7.6% year on year. The stock is down 15.7% since reporting and currently trades at $635.75.

Read our full, actionable report on Meta here, it’s free for active Edge members.

Market Update

Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.