SOURCE: Five Star Equities

Five Star Equities

May 01, 2012 08:20 ET

Critics Skeptical of the Future of the Social Media Industry

Five Star Equities Provides Stock Research on Pandora Media Inc. and Yelp Inc.

NEW YORK, NY--(Marketwire - May 1, 2012) - Social media stocks have been becoming increasingly popular among investors in 2012. They have even garnered enough attention to launch their own ETF; the Global X Social Media Index ETF (SOCL) which is up nearly 18 percent year-to-date. Despite the growing popularity, critics are skeptical of the future of the Social Media Industry after three companies who went public in the past year have traded below their initial IPO price. Five Star Equities examines the outlook for social media stocks and provides equity research on Pandora Media Inc. (NYSE: P) and Yelp Inc. (NYSE: YELP).

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Pandora, Zynga, and Groupon, which were expected to "wow" investors, have all seen their shares dip below their initial public offering pricing. Pandora, which had an IPO pricing of $16 in June, closed at $8.88 Friday; Zynga, priced at $10 in December, closed at $8.52; and last but not least Groupon, which went public in November at a price of $20, saw shares fall to $11.98 at close Friday. The recent losses from the last batch of social media companies have raised concerns for the upcoming IPO of Facebook. "There is some Facebook skepticism for the first time from IPO investors, mostly big mutual funds, having gotten burned badly on buying into the offerings of Pandora, Zynga and Groupon," said Sam Hamadeh, CEO of PrivCo, a research firm.

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Pandora Media is an Internet radio in the United States. As of January 31, 2012, it had over 125 million registered users. The Music Genome Project and its playlist generating algorithms predict listener music preferences, play music content suited to the tastes of each individual listener and introduce listeners to music they will love. Pandora generates revenue from advertising. It also offers a subscription service to listeners. The company announced that their 2012 annual meeting of stockholders will webcast live from Oakland, Ca. on Wednesday, June 6, 2012 at 2:05PM PT / 5:05PM ET.

Yelp connects people with local businesses. Its users contribute reviews of every type of local business, from restaurants, boutiques and salons to dentists, mechanics and plumbers. Its platform provides local businesses with a range of free and paid services, which help them to engage with consumers at moment when they are deciding where to spend their money. The Company generates revenue from the sale of advertising on its Website to local businesses and national brands. The company has scheduled a conference call to discuss 2012 first-quarter earnings on Wednesday, May 2, 2012 at 1:30 p.m. PT.

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