Acceptance of the Internet has increased rapidly in the recent past. The global internet penetration rate will be around 63% in 2022, with around 5 billion people using the internet. The number of devices connected to the Internet is expected to increase reach 500 billion by 2030.
The Internet industry seems to have been given a boost by the Internet of Things (IoT) market, which has great potential. The market is expected to grow by a 26.4% CAGR reach $2.47 trillion between 2022 and 2029.
However, the tech sector faced a headwind from higher interest rates, inflation and a slowing economy this year. Additionally, cybercrime is expected to cost businesses worldwide an estimated $10.50 trillion annually by 2025.
Although it may be best to avoid internet stock Snap Inc. (SNAP) fundamentally solid shares of Expedia Group, Inc. (EXPERIENCE), trivago NV (TRVG), Yelp Inc. (WHINE) and Data Storage Corporation (DTST) might be worth it.
Stocks to avoid:
Snap Inc. (SNAP)
SNAP operates internationally as a camera company. The company offers Snapchat, a camera application with various functionalities that allows people to communicate visually through short videos and images.
SNAP recently settled a $35 million class action lawsuit with the state of Illinois to pay Illinois residents who used the app’s “lenses” or “filters” features between a certain point in time. The lawsuit alleged that the SNAP filters and lenses violate the state’s Biometric Information Privacy Act (BIPA)..
For the second quarter ended June 30, SNAP’s total costs and expenses increased 28.7% from the year-ago quarter to $1.51 billion. Adjusted EBITDA fell 93.9% from the year-ago quarter to $7.19 million. Non-GAAP net loss was $29.60 million, up 120.5% year over year. The company’s net loss per share rose 120% year over year to $0.02.
Analysts expect SNAP’s earnings per share to fall 71.5% year over year to $0.06 for the fourth fiscal quarter ending in December. The consensus estimate of revenue is $1.31 billion.
The stock is down 86% over the past year and 77.5% year-to-date to close its last trading session at $10.60.
The stock has an overall rating of D, which equates to our Sell POWR ratings System. The POWR Ratings evaluate stocks based on 118 different factors, each with its own weighting.
SNAP is rated D in growth, momentum, stability, mood and quality. It is ranked 56th out of 82 stocks in the ranking Internet Industry.
In addition to the above POWR rating levels, one can see the SNAP ratings for growth and quality here.
Stocks to buy:
Expedia Group, Inc. (EXPERIENCE)
EXPE is an online travel company that operates through retail; B2B; and trivago segments. The Company’s portfolio of brands includes Brand Expedia, Hotels.com, Vrbo, Hotwire and CarRentals.com.
On June 30th, EXPE announced a collaboration with loyalty program Bilt Rewards to launch the new Bilt Travel Portal. Christian Gerron, Senior Vice President, Media & Brand Partnerships, EXPE said, “Our innovative solutions provide Bilt Rewards with the technology they need to create a wonderful experience and offer their members an unprecedented range of travel options.”
On May 4th, EXPE unveiled its three-pronged strategy to redefine its place in the travel industry by unveiling its new technology platform Expedia Group Open World, a reimagined marketplace designed to serve partners and travelers. The new platform aims to provide an e-commerce suite that empowers and encourages people to travel.
EXPE’s revenue increased 50.7% year over year to $3.18 billion for the second quarter ended June 30 Adjusted EBITDA grew 222.4% year over year to $648 million. Operating income was $345 million, an increase of 361.4% over the same period last year.
Analysts expect EXPE’s revenue for the third fiscal quarter ended September 2022 to be $3.57 billion, up 20.7% year over year. Street expects the company’s current-quarter EPS to be $4.12, up 16.7% year over year. Additionally, the company has beaten consensus EPS estimates in three of the last four quarters, which is impressive.
EXPE is up 6.6% over the past month to close its last trading session at $105.97.
EXPE’s POWR ratings reflect this promising outlook. The company has an overall rating of B, which means buy in our proprietary rating system. The stock is rated A for quality and B for growth and value. It is #3 in the internet industry.
Beyond what we’ve given above, we’ve also assigned EXPE grades for Momentum, Stability, and Mood. Get all EXPE reviews here.
trivago NV (TRVG)
The TRVG operates a hotel and accommodation search platform worldwide. It offers an online meta search for hotels and accommodations through online travel agencies, hotel chains and independent hotels. It is headquartered in Dusseldorf, Germany.
For the fiscal second quarter ended June 30, 2022, TRVG’s total revenue increased 51.6% year over year to €144.80 million ($144.05 million). Adjusted EBITDA increased 186.4% from the prior-year period to 30.30 million euros ($30.14 million).
Consensus EPS estimate of $0.05 for the fiscal third quarter (ended September 2022) reflects a 97.5% year-over-year increase. Likewise, the consensus estimate of $184.16 million in revenue for the same quarter shows a 14.5% improvement over the same period last year. The company has also beaten consensus EPS estimates in each of the last four quarters.
Over the past month, the stock is up 3.4% to close its last trading session at $1.53.
TRVG has an A grade for quality and a B grade for growth and value. It’s #1 in the same industry. click here to view the additional POWR ratings for TRVG (Momentum, Stability and Sentiment).
Yelp Inc. (WHINE)
YELP operates a platform that connects consumers internationally with local businesses. The Company’s platform covers various local business categories and offers businesses free and paid advertising products.
YELP net income increased 16.2% year over year to $298.88 million for the second quarter ended June 30. Adjusted EBITDA increased 40% year-over-year to $67.32 million, while net income attributable to common shareholders improved 90.1% year-on-year to $8.01 million. The company’s net income per common share increased 120% year over year to $0.11.
Consensus EPS estimate of $0.63 for the fiscal quarter ended September 2022 indicates a 1.3% year-on-year improvement. Consensus revenue is expected to increase 14.2% year over year to $307.42 million over the same period.
The stock is up 20.1% over the past three months and 12.4% over the last month to close its last trading session at $34.21.
YELP has an overall rating of A, which translates to “Strong Buy” in our proprietary rating system. The stock is rated A for quality and B for value. It is number 2 within the same industry.
To view additional POWR Ratings for Growth, Momentum, Stability and Sentiment for YELP, click here.
data storage company (DTST)
DTST provides multi-cloud information technology solutions primarily in the United States. The company offers data protection and disaster recovery solutions, support, maintenance and internet solutions. It also offers cyber security solutions.
In May, DTST announced that for the 2022 season, the Professional Fighters League has partnered with Flagship Solutions Group, a DTST company, to use cloud-based products and AI to reshape the way fans deal with the sport of MMA.
DTST’s revenue was $4.83 million for the second quarter ended June 30, representing a 36.8% year-over-year growth. Adjusted EBITDA was $32.88k, while gross profit increased 22.8% to $1.85 million compared to the same period last year.
Analysts expect DTST’s revenue for the quarter ended September to be $5.50 million, indicating year-over-year growth of 42.5%.
DTST is up 0.9% on the day to close its last trading session at $2.35.
It’s no surprise that DTST has an overall B rating, which translates to Buy in our POWR rating system. DTST has a grade of A for mood and B for value and quality. It is number 6 in the internet industry.
Beyond what we’ve given above, we’ve also assigned DTST grades for Growth, Momentum, and Stability. Get all DTST reviews here.
SNAP shares traded at $10.81 per share on Wednesday afternoon, up $0.21 (+1.98%). Year-to-date, SNAP is down -77.01% versus a -12.20% gain in the benchmark S&P 500 over the same period.
About the author: Kritika Sarmah
Her interest in risky instruments and her passion for writing made Kriti an analyst and financial journalist. She earned her bachelor’s degree in commerce and is currently completing the CFA program. With her fundamental approach, she wants to help investors to identify untapped investment opportunities. More…
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