April 30, 2018updated 15 Aug 2018 3:28pm

Microsoft share price: LinkedIn owner trumps Facebook in social media co investment rankings

By Dominic Ponsford

Microsoft has been tipped as the social media company best placed to deal with the various challenges facing the sector according to new analysis released by GlobalData’s Thematic Research Division.

The company founded by Bill Gates and now led by Satya Nadella has replaced Facebook at the top of GlobalData’s list of thematic leaders in the social media sector. Facebook, by contrast, has fallen from the number one position just six weeks ago to number 16 following the Cambridge Analytica scandal.

GlobalData is Verdict’s parent business intelligence company.

The thematic ranking judges which companies are best placed to succeed in a world of disruptive threats and is based on how they score against a number of themes (see full definition below) that drive their sector’s earnings.

Twitter is even lower in 23rd position because it is not seen as performing well on a number of themes critically important to the future of the social media sector. At the weekend new allegations emerged claiming that thousands of fake Russian Twitter accounts were used to exert influence on the platform in the run-up to the 2017 general election by tweeting positive statements about Labour leader Jeremy Corbyn.

Both Twitter and Facebook face the prospect of tougher regulation that will aim to address the lack of transparency in the way they profit from user’s personal data.

GlobalData’s Thematic Research team ranks the top 600 companies in the tech, media and telecoms space by market value against the 50 most important themes driving earnings in their sector.

The social media top five was arrived at after ranking the 27 companies strongly involved in social media for their performance when it comes to what are viewed by GlobalData as the ten dominant themes in this sector, namely:

  • E-commerce
  • AI
  • Gaming
  • Voice
  • Alternative reality
  • Mobile payments
  • Internet TV
  • M&A
  • Regulation
  • Cyber Security.

Currently, the major challenge affecting the sector, according to GlobalData thematic research, is regulation. This accounts for 25% of each company’s scoring.

The top five social media companies in the ranking (with their market cap and country of origin) are:

1
Microsoft
$731bn
US
2
Alphabet
$728bn
US
3
Naver
$20bn
Korea
4
Yandex
$9.7bn
Russia
5
Tencent
$481bn
China

Microsoft owns LinkedIn, the global networking site for business which provides premium paid-for tools for recruiters.

Alphabet is the parent company of Google, which is active in the social media space and also owns YouTube.

Naver is the dominant search engine in South Korea.

Yandex is the dominant search engine in Russia.

China-based Tencent owns services including instant messenger app WeChat.

GlobalData head of thematic research Cyrus Mewawalla said: “Our thematic screen ranks companies within a sector on the basis of overall technology leadership in the ten themes that matter most to their industry, generating a leading indicator of future earnings growth.

“These are the social media companies likely to do best judged on the big themes in the sector.

“Microsoft has invested in many of the themes that are critical to the future of the social media sector, such as artificial intelligence, cloud infrastructure, augmented reality, voice recognition, big data and more. Its LinkedIn subsidiary once integrated into Office 365 will benefit from these investments.”

These rankings are part of GlobalData’s thematic research ecosystem, available to its subscribers.

What is GlobalData’s thematic research ecosystem?

“GlobalData has developed a unique thematic methodology for ranking technology, media and telecom companies based on their relative strength in the big investment themes that are impacting their industry.

“Our ‘thematic engine’ identifies which companies are best placed to succeed in a future filled with multiple disruptive threats.

“To do this, we track the performance of the top 600 technology, media and telecom stocks against the 50 most important themes driving their earnings, generating 30,000 thematic scores. The algorithms in GlobalData’s ‘thematic engine’ help to clearly identify the longer-term winners and losers within the TMT sector.”

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