The Senate Judiciary Committee’s recent hearing has intensified the scrutiny on social media giants, including Meta Platforms (NASDAQ:META) and TikTok, painting a grim reality of the platforms’ impacts on youth. As the legislative hammer looms with potential regulations, the sentiment to dispose of social media stocks to sell grows.

With heart-wrenching accounts from parents whose children fell prey to exploitation, the insufficiencies of social media businesses in safeguarding their users were laid bare. Senators grilled CEOs over their prioritization of bottom-line expansion over user safety, yet apologies and promises seemed hollow against a backdrop of repeated failures. Hence, investors must reconsider their stakes in an industry under fire for its ethical lapses by effectively separating the wheat from the chaff.

Weibo (WB)

Source: Shutterstock

Weibo (NASDAQ:WB), the Chinese microblogging titan, has been stumbling of late. Despite the effective handling of operational costs, which led to a slight earnings beat in its third quarter, the company’s revenue barely budged. The significant slowdown in sales at 13% year-over-year is a sign of China’s broader economic woes and perhaps a reflection of Weibo’s challenges amidst a competitive social media landscape. Moreover, its forward revenue growth estimates stand at a dismal 13%, along with a negative 7% EBITDA growth.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

However, despite the company’s stock price taking a hit, its valuation hardly tempts the value-seeking investor, with the current sentiment leaning towards caution. Analysts at Tipranks assign a consensus ‘hold’ rating to WB stock, supporting the wary outlook. Holding on to Weibo’s shares, given its slightly over fair valuation and the shadow of modest growth projections, appears to be a judicious course for now.

JOYY (YY)

Source: mama_mia / Shutterstock.com

Popular social media player JOYY (NASDAQ:YY) grapples with a lackluster fourth-quarter forecast, as its revenue projections chillingly lag behind market expectations, signaling a -6.6% year-on-year drop. This gloomy prediction overshadows its slight revenue beat and substantial earnings per share triumph in the third quarter. Investors fixated on the forewarned revenue shrinkage are wary of the financial hurdles looming on JOYY’s horizon. Its progress is patchy at best, with some regions lagging in the wake of more prosperous markets.

Amid this backdrop, there is enthusiasm surrounding YY stock, partly thanks to a robust share repurchase approach that outstripped its peers. The company’s aggressive buyback, scaling up to triple last year’s budget, adds to its attractiveness. However, this silver lining is clouded by the stark reality of subdued revenue growth, hinting that any share price jump may be capped by its fundamental growth challenges.