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Is Social Media the New Tobacco?

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Over the last 25 years, the world has changed in remarkable ways.

To name a few – the world has become more connected, the Internet has become an integral part of our lives, and people carry around devices to stay tethered to the digital world. This has transformed how people communicate, socialize, do business, and live their lives.

There have been benefits as it’s created new opportunities and lowered barriers for anyone who wants to share their ideas or sell products. But, we’re also starting to see that there are profound drawbacks.

Rise of Social Media

These same principles apply to social media. In theory, it’s a great idea to give people a platform and let them form digital bonds with their friends and family to keep each other updated about their lives.

In reality, there’s increasing evidence that it’s creating more problems than it solves. It’s possible that our brains aren’t hard-wired to handle the stimulus of social media.

There are increasing amounts of isolation, political polarization, and mental health issues that are being tracked back to social media usage. It’s making us more connected but lonelier, angrier, and more distrustful of each other.

Despite users self-reporting that social media use makes them feel worse, they continue logging in more frequently and for longer periods.

Removing the moral layer, social media is a fantastic business. There’s a little marginal cost of adding new users. Many users become addicted to the product and encourage people they know to join. The network’s value increases as more people join which creates a wider and deeper moat.

The product is free, so rapid growth is possible. Users are monetized through advertising. Since social media companies have a considerable amount of information about their users through the content they consume and engage with, ads can be micro-targeted.

In their short history, the dominant social media companies like Facebook (FB), Tencent, Snap (SNAP), Twitter (TWTR), and Pinterest (PINS) have grown bigger and have been able to increase average revenue per users.

Great Business Model

It’s hard to imagine what will displace social media. Established social media companies with large user numbers benefit from the network effects and addictive nature of its product. Social media is likely to become even more influential in the coming years as other advertising channels continue to lose relevance.

Additionally, younger people are using social media to an even larger degree which means its influence and use are likely to continue growing in the coming years.

Most businesses get disrupted due to competition. Social media companies are harder to disrupt because their main asset is their network which competitors can’t recreate. A valuable network attracts more users, which in turn, makes their network more valuable.

Parallels to Tobacco Industry 

We can gain some potential insight into the long-term path of social media companies by looking at the tobacco industry which is similar in so many ways.

Both have been great businesses solely in terms of delivering investment outperformance. Over the last decade, social media stocks have been one of the best performers in the market. The Global X Social Media ETF (SOCL) is up 310% since it IPO’d in late 2011, compared to the S&P 500’s 175% gain over this period.

The tobacco industry’s gains are even more impressive. $1 invested in tobacco in 1900 was worth over $6 million in 2020. Since its IPO in 1968, Altria (MO) has returned 18% a year which is more than double the S&P 500’s average return.

Both have negative externalities. Social media is affecting mental health and exacerbating political polarization. Similarly, tobacco use leads to negative, long-term health effects. Both also have an addictive product with high margins.

For tobacco, their outperformance against other sectors only started abating due to a foe that it couldn’t beat – the government. Smoking rates also started coming down due to public health campaigns and increasing awareness about the health consequences of smoking.

The business’ costs sharply rose due to lawsuits filed by the state and the federal government against the tobacco industry to hold them accountable for tobacco-related health costs. Another factor was increased regulation and taxes.

Regulation Is the Only Threat

I believe that the only thing that will halt social media’s power is the government in the form of increased oversight or regulations. Two potential actions could be limits on what kind of user information the companies can share with advertisers or increased accountability for what kind of content the platforms must moderate.

The tobacco industry spent prodigious sums on lobbying state and federal governments to delay its reckoning. Likely, the social media companies will also pursue this strategy.

However, the industry has adversaries on both sides of the aisle. On the Right, they are skeptical of so much power concentrated in Silicon Valley companies run by people who tend to lean to the left. So, there’s a concern of censorship and right-wing views being silenced.

On the Left, there’s a focus on how social media companies will prevent the spread of “misinformation” and deter their platforms from being used by foreign governments or political organizations to sow chaos.

POWR Ratings

The POWR Ratings are also bullish on most social media stocks.

Facebook (FB) has a Strong Buy rating with an “A” in all POWR components including Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank. It’s ranked #4 out of 57 Internet stocks.

Twitter (TWTR) is rated a Buy with an “A” for Trade Grade and Industry Rank with a “B” for Buy & Hold Grade and Peer Grade. Among Internet stocks, it’s ranked #17 out of 57.

Pinterest (PINS) is rated a Strong Buy and has an “A” for Trade Grade, Peer Grade, and Industry Rank with a “B” for Buy & Hold Grade.

Closing Thoughts

For the past century, tobacco stocks have outperformed by a significant margin. In recent years, this outperformance has started to wane, as fewer people are smoking, and there is an increasing regulatory burden that eats into profit margins.

It makes sense that social media stocks will follow a similar trajectory. They are going to continue growing bigger, more efficient at monetizing users, and effective in growing its app in terms of users and time spent.

The only thing that can stop them will be the type of things that halted the tobacco company’s outperformance – government action. While this is a longer-term threat, there is going to be increasing scrutiny as they get more influential especially with the upcoming election.

The tobacco industry’s experience also teaches that until this threat materializes, the stocks should continue trending higher. Even after it materializes, the bigger companies can gain more market share as they are best-equipped to handle the increased cost and complexity of more regulations.

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FB shares were trading at $298.55 per share on Wednesday afternoon, up $3.11 (+1.05%). Year-to-date, FB has gained 45.46%, versus a 11.63% rise in the benchmark S&P 500 index during the same period.

About the Author: Jaimini Desai

Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. As a reporter, he covered the bond market, earnings, and economic data, publishing multiple times a day to readers all over the world. Learn more about Jaimini’s background, along with links to his most recent articles. More…

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Social Networking Sites Market 2020 (COVID-19 Worldwide Spread Analysis) by Key Players …

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The Global Social Networking Sites Market research report offers an in-depth evaluation of each crucial aspect of the industry that relates to market size, share, revenue, demand, sales volume, and development in the Social Networking Sites market. The report analyzes the worldwide Social Networking Sites market over the volume trends, values, and historical pricing structure that make it easy to estimate growth momentum and precisely predict upcoming opportunities in the market. The report also evaluates changing dynamics and driving forces which have been considered as growth-boosting of the Social Networking Sites market. Also the study sheds light on restraints and limitations in the Social Networking Sites market that could potentially become obstacles while the market is proceeding to achieve substantial revenue. The report also aids clients to gain comprehensive knowledge of a Social Networking Sites market environment that comprises terms such as trading policies and entry barriers, as well as political, social, regulatory, and financial concerns that may also harm market growth momentum.

Request for a sample report here https://www.orbisresearch.com/contacts/request-sample/4754992

Leading competitors in the Social Networking Sites market:

WhatsApp

QQ

Tik Tok

Qzone

Tumblr

Sina Weibo

Medium

Instagram

Messenger

LinkedIn

Baidu Tieba

Facebook

Viber

Reddit

WeChat

Line

Telegram

Twitter

YouTube

Pinterest

Snapchat

The report also evaluates changing dynamics and driving forces which have been considered as growth-boosting of the Social Networking Sites market. Also the study sheds light on restraints and limitations in the Social Networking Sites market that could potentially become obstacles while the market is proceeding to achieve substantial revenue. The report also aids clients to gain comprehensive knowledge of a Social Networking Sites market environment that comprises terms such as trading policies and entry barriers, as well as political, social, regulatory, and financial concerns that may also harm market growth momentum.

Global Social Networking Sites market overview in brief:

According to the statistics, the Social Networking Sites market is likely to report considerable revenue coupled with substantial growth during the forecast period as growing Social Networking Sites demand, increasing disposable incomes, raw material affluence, changing consumption tendencies, Social Networking Sites market trends, and stable market structure are fueling the growth of the world Social Networking Sites market. The market holds the potential to radically influence its peers and parent Social Networking Sites markets alongside the international financial system.

Detailed competitive scenario of the global Social Networking Sites industry:

The report highlights objectives, missions, core business values, and niche markets of leading participants operating in the global Social Networking Sites industry. It also facilitates clients with the acumen to gain competitive advantages in the market and the strengths and weaknesses of their strong opponents. The report underscores their strategic moves, including product launches, brand developments, and promotional activities, as well as mergers, ventures, amalgamations, and acquisitions as efforts to dilate their serving area and deliver better fit products to their customer base.

In Social Networking Sites report, participants’ financial assessments are also included which consists of an evaluation of gross margin, sales volume, cash flow, revenue outcomes, capital investment, and growth rate. That will allow clients to gain intact comprehension of participants’ financial strengths and position in the worldwide Social Networking Sites industry. Their production capacity, plant locations, Social Networking Sites manufacturing processes, production volume, product specifications, raw material sourcing, distribution networks, and international presence are also analyzed in the report.

Ask our Expert if You Have a Query at: https://www.orbisresearch.com/contacts/enquiry-before-buying/4754992

Acquire Thorough Global Social Networking Sites Market Research Study 2020

Leading segments of the global Social Networking Sites market with reliable forecasts:

The report further studies crucial segments of the Social Networking Sites market, including types, applications, technologies, regions, and end-users. It explains the performance and importance of each segment of Social Networking Sites considering revenue share, demand, sales volume, and growth prospects. Also the analysis helps clients precisely determine the Social Networking Sites market size to be targeted and forecast estimations assist them in selecting remunerative segments that will drive business growth in the near future.

Different product categories include:

Daily

Weekly

Less often

Global Social Networking Sites industry has a number of end-user applications including:

Mobile phone

Computer

Global Social Networking Sites Market Regional Analysis:

The next section of the report consists of a detailed analysis of the Social Networking Sites market across various countries in different regions. It provides a Social Networking Sites industry outlook for 2020–2027 and sets the forecast within the context of the Social Networking Sites market to include the latest technological developments as well as offerings.

1. North America Country (United States, Canada)

2. South America

3. Asia Country (China, Japan, India, Korea)

4. Europe Country (Germany, UK, France, Italy)

5. Other Country (Middle East, Africa, GCC)

This study discusses the key trends within countries that contribute to the growth of the Social Networking Sites market as well as analyses the degrees at which the drivers are influencing the market in each region. The global Social Networking Sites industry report evaluates the present scenario and the growth prospects of the Social Networking Sites market in various regions globally.

TOC Snapshot of Global Social Networking Sites Market

1. Social Networking Sites Product Definition

2. Worldwide Social Networking Sites Market Manufacturer Share and Market Overview

3. Manufacturer Social Networking Sites Business Introduction

4. Social Networking Sites Market Segmentation (Region Level)

5. World Social Networking Sites Market Segmentation (Product Type Level)

6. Social Networking Sites Market Segmentation (Industry Level)

7. Segmentation (Channel Level) of Social Networking Sites Market

8. Social Networking Sites Market Forecast 2020-2027

9. Product Type Social Networking Sites Segmentation

10. Segmentation of Social Networking Sites Industry

11. Cost of Social Networking Sites Production Analysis

12. Conclusion

Direct Purchase Report @ https://www.orbisresearch.com/contact/purchase-single-user/4754992

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Facebook Purchases Majority Stake in Indian Internet Provider Jio for $5.7 Billion

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If you wanted to know how much value Facebook sees in the emerging Indian market, this deal certainly provides some indication.

After recent reports that Facebook was looking to acquire a stake in Indian internet provider Jio, The Social Network has now confirmed that it has purchased a majority stake in the Reliance-owned venture for a massive $US5.7 billion.

As explained by Facebook:

“Today we are announcing a $5.7 billion, or INR 43,574 crore, investment in Jio Platforms Limited, part of Reliance Industries Limited, making Facebook its largest minority shareholder. The investment underscores our commitment to India, and our excitement for the dramatic transformation that Jio has spurred in the country.”

Launched just three years ago, Jio has quickly become one of the top internet providers in India, with some 388 million customers in the region. Facebook’s involvement will provide Jio with a whole range of new resources, while the acquisition will provide Facebook with a new way into the Indian market, which it’s been looking to gain a foothold in for many years, with varying levels of success.

Most notable for Facebook will be connection to WhatsApp, the most used messaging app in the nation.

As Facebook notes:

“Over the years, Facebook has invested in India to connect people and help businesses launch and grow. WhatsApp is so ingrained in Indian life that it has become a commonly used verb across many Indian languages and dialects. Facebook brings together friends and families, but moreover, it’s one of the country’s biggest enablers of growth for small businesses. And Instagram has grown dramatically in India in recent years as the place where people follow their interests and passions.”

Facebook will be hoping to use its newfound presence in the local market to fuel more business activity via WhatsApp, and Facebook, which will incorporate broader expansion of Indian eCommerce platforms like Meesho, which Facebook also acquired last year.

Meesho

India, and its 1.4 billion citizens, is the next key battleground for the tech giants, with both Facebook and Google both working to gain a foothold in the Indian market in order to expand their audience base, provide new business tools, and build revenue-generating partnerships that will facilitate significant opportunities to expand their respective empires.

The developing region is on the cusp of hitting the next stage in tech adoption. India is now the world’s second-largest smartphone market after China, while the number of internet users in the nation is expected to top 850 million by 2022. For comparison, the US is expected to reach around 300 million internet users at the same stage. 

Given this, the tech company that can best position itself in the Indian market stands to win out big time as Indian users adapt to how they live and work incorporating online means.

Facebook’s deal for Jio is a massive win in this respect, and while past efforts like its Free Basics program haven’t been welcomed by Indian regulators, it would appear that Facebook has found a new opportunity, which will be a key element in the platform’s growth strategy moving forward.

That will also, eventually, facilitate new opportunities for businesses looking to connect with the Indian market, as Facebook moves to provide more business tools.

Social Media Today

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WhatsApp Launches New ‘Together at Home’ Sticker Pack for Coronavirus Lockdown Chats

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WhatsApp has introduced a new sticker pack called ‘Together at Home’. The instant messaging giant has partnered with World Health Organisation (WHO) to create these new stickers to reflect the feelings and emotions that people across the globe are going through at the moment. These new stickers will be available in the English, Hindi, and a host of other languages. WhatsApp introduced stickers two years ago, and since then it has become an important tool of expression on the social platform.

The new sticker pack is called ‘Together at Home’ and it aptly reflects all the moods during this period of staying indoors. It has a sticker that shows a man with a laptop wearing pyjamas depicting the new norm of ‘work from home’. WhatsApp promotes social distancing through stickers that depict an ‘air high five’ and ‘group video calling’. There are stickers inside the pack that show a man binge-watching a series on the bed, another man doing yoga with his dog, reminding people to wash hands, people catching up in balconies, and a female snooping on neighbours using binoculars. There are stickers that celebrate medical heroes as well as personal heroes during the COVID-19 crisis.

25 WhatsApp Tricks to Help Master the Messaging App

The “Together at Home” sticker pack is available within WhatsApp, and can be downloaded for free. It is currently available in English as well as text localised for 10 languages – Arabic, French, German, Hindi, Indonesian, Italian, Portuguese, Russian, Spanish and Turkish. With this new sticker pack, WhatsApp looks to offer more ways to stay connected during the pandemic.

The company has been working on improving the WhatsApp experience recently, especially as more as more people stay and work at home. The latest beta has doubled the group calling limit from four to eight on WhatsApp, and now that it has been enabled for both Android and iOS users, the stable rollout should follow soon.


Is iPhone SE the ultimate ‘affordable’ iPhone for India? We discussed this on Orbital, our weekly technology podcast, which you can subscribe to via Apple Podcasts or RSS, download the episode, or just hit the play button below.

NDTV Gadgets360.com

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