This is the Only Way to Profit From the Social Media Slaughter

Hey – stop tweeting about what you had for breakfast and listen up because this is important.

Social media stocks are in trouble.

They’ve been leaping off the cliff like lemmings this week. And they’re dragging hopeful investors down with them.

Look, I enjoy a small dose of social media myself. I think Twitter is a great way to cut through the B.S. of everyday life and communicate with likeminded people—especially when it comes to the markets.

But I wouldn’t touch that mangled stock with a hundred-foot pole. Twitter shares are hitting new lows as I type. After absorbing a disappointing earnings report last week, it’s clear investors aren’t even close to hitting the “buy” button just yet…

Look at that sucker. Over $67 in December 2013. More than $50 this spring. Now $29 in change. So here’s the big question: Is the decimation of Twitter the new normal for social media stocks?

Last month, I told you how anti-social Mr. Market had been acting lately. Social media stocks were dropping left and right. And sitting from our perch today, it’s becoming clear that some of these God-awful stocks haven’t even come close to recovering. And there’s probably plenty of pain to come.

The laundry list of losers is getting long. LinkedIn is down about 15% so far this year. Investors have chopped Yelp stock in half. And Groupon is down nearly 45% year-to-date.

And don’t think for a second the carnage has gone unnoticed…

CNN Money reports that some of the hottest private tech companies are laying low thanks to the social media slaughter.

“Some experts think these and other private companies are delaying an IPO for as long as humanly possible due to worries about fickle Wall Street investors,” CNN Money says. “The fears are somewhat justified. Tech companies often get punished for reporting stellar results that fall short of the perfect results analysts expected.”

Somewhat justified. Sure. If I was the CEO of Pinterest, I’d be terrified to go public right now after watching these dumpster fires flare up across the sector.

Look, we’re not talking about cheap value plays here. Investors have paid a huge premium for these social media companies. They’re demanding serious growth these firms just haven’t been able to offer. And that, my friend, is a recipe for rapidly falling stock prices.

Fortunately, you can do yourself a favor by:

  1. Ignoring these hyped-up tech initial public offerings like Pinterest, Uber, and Airbnb.
  2. Not attempting to catch falling knives like Twitter and Yelp. Just leave these sorry stocks alone!

Most of these speculative stocks look sickly. Treat them accordingly. You wouldn’t bunk with a leper—so don’t cozy up these sad sacks.

Alright, now get back to your stupid tweet about your damn breakfast.

Regards,

Greg Guenthner
for The Daily Reckoning

P.S. $100 is next for this stock. If you want to cash in on the biggest profits this market has to offer, sign up for my Rude Awakening e-letter, for FREE, right here. Stop missing out. Click here now to sign up for FREE.