Social media stocks start to bounce back

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Don't look now, but one of the hardest-hit sectors in the stock market is getting some of its swagger back. Social media has been on a bit of a stealth-like bull run and some traders are starting to take note.

While there have been individual leaders and laggards among the group, generally speaking, sentiment has been improving. One exchange-traded fund that tracks social media-related stocks—the Global X Social Media Index ETF—closed at a bottom of $16.36 per share back on May 7 of this year, and has since rallied by more than nearly 20 percent.

In other words, a $10,000 investment made less than two months ago has already turned into nearly $12,000. While this particular ETF has around $150 million in net assets, and only trades around 250,000 shares a day, many traders still use it as a proxy for how the industry is doing. That's because many of the top holdings in the fund are some of the biggest and most well-known names in social media.

Among the top holdings are companies like LinkedIn. Shares of the professional networking site hit a record high of $257.56 back on Sept. 11, 2013, and subsequently lost nearly half their value before bottoming out on an intraday basis at $136.02 on May 7.

Since then, LinkedIn has managed to rally by more than 20 percent, giving it the chance to be tagged as a bull market stock. However, it still needs to rally by 55 percent from current levels to get back toward record highs.

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Facebook has been even more impressive. Shares in the world's largest social media company have gained 23 percent since hitting a recent intraday low of $54.66 on April 28. That means that it would need to gain just another 8 percent before getting back to its record high of $72.59 which it hit on March 11.

One of the strongest recoveries has been Twitter. The stock hit a post-IPO low of $29.51 on May 7, and the drop had many traders questioning whether or not it would end up falling below the psychologically important $26 initial offering price. Instead, Twitter rose above $40 in Thursday trading for the first time since May 1.

Both Facebook and Twitter shares were beneficiaries of positive notes from Barclays that essentially amounted to "buy" ratings.

In the case of Facebook, analysts Paul Vogel and Michael Urciuoli said that the company had been impressive in executing its transition into being a primarily mobile company. They also said that its recent acquisition strategy with companies like mobile messaging firm WhatsApp and virtual reality company Oculus VR is being viewed as ambitious by some, but will be a positive for the company.

As for the aging demographic for Facebook users, they said it's a net positive for the company given higher spending power and household status. Facebook's "buy" rating is accompanied by a $78 price target for the stock.

As for Twitter, they expect strong advertising revenue to continue, and for TV to be a growing opportunity. Twitter's "outperform" rating comes with a $46 price target.

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The real question for investors is whether or not that momentum in social media stocks will be carried into the second half of the year, especially if the broader market experiences a pullback. Social media stocks have been much more volatile than the rest of the market, and could lead to losses just as quickly as it led to gains.

—By CNBC's Dominic Chu.