Here’s Why Wall Street Is Not in the Social Media Stocks Cult

The social media sector has drawn a significant amount of attention to itself this year. Between initial public offering debacles and the implosion seen in social names across the entire board, the companies involved have received several strikes against them from Wall Street. However, the companies are still widely popular among Main Street.

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The eBusiness knowledge-base firm eBizMBA provides a constantly updated list of the most popular social networking sites each month. The sites are ranked according to Alexa Global Traffic Rank and the U.S. Traffic Rank from Compete and Quantcast. The top 5 social networking sites are listed below.

1. Facebook (NASDAQ:FB): The site receives an estimated 750 million unique monthly visitors, which makes it the most-used social media site on the Internet. However, since the company’s highly publicized IPO in May, shares have plunged by 45 percent.
2. Twitter: The self-proclaimed real-time information network came in second place with 250 million unique monthly visitors. Speculation about a buyout recently rose when it was reported that Apple (NASDAQ:AAPL) once considered an investment in Twitter, but nothing has materialized.
3. LinkedIn (NYSE:LNKD): The professional network giant has been one of the few bright spots in social media for Wall Street. The company has surged 65 percent year-to-date to climb above $100, which is well north of its $45 IPO price tag. LinkedIn receives an estimated 110 million unique monthly visitors.
4. MySpace: Although many consider this to be Facebook’s future, MySpace is still a highly visited site, logging 70.5 million unique monthly visitors and beating the social media network launched by the king of search engines.
5. Google+ (NASDAQ:GOOG): The social media network was launched last year and ranks number five on the list with 65 million unique monthly visitors.

While these names may be popular to kill some free time with, they serve as a clear reminder that business models are still important when it comes to investing in social companies. LinkedIn and Google both have a stronger track record for monetization, and their stock performance since going public reflect that. Another example of Main Street getting too carried away with online addictions is Zynga (NASDAQ:ZNGA). Although the company ranked number one among the most popular gaming websites with 27 million unique monthly visitors, ahead of Pogo.com and Yahoo! Games (NASDAQ:YHOO), its share price has plummeted nearly 70 percent this year.

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