Internet-based platform providers have benefited significantly from increased remote activity over the past two years. In addition, the continued digital transformation of almost all industries has contributed to positive investor sentiment towards the internet industry.
In addition, the Internet is expected to experience seismic change with the arrival of Web 3.0, the next generation of the Internet. The new web is expected to increase the effectiveness and interconnectivity of surfing, thereby improving the industry’s growth prospects.
In addition, the government intends to invest heavily in broadband, cybersecurity and electric vehicles. It is expected to reach the global internet services market $644.87 billion by 2028, a CAGR of 4.4%.
So, given the industry’s impressive growth attributes, we think it might be wise to invest in high-quality Internet stocks from Shutterstock Inc. (SSTK) and Data Storage Corporation (DTST). Conversely, it might make sense to use Twitter Inc. (TWTR), given the poor fundamentals and ongoing litigation surrounding Elon Musk’s termination of his takeover bid for the company.
Stocks to buy:
Shutterstock Inc. (SSTK)
SSTK is a technology company providing high quality content and creative workflow solutions in North America, Europe and internationally. The company offers its services under the Shutterstock, Bigstock, Offset, TurboSquid, and PremiumBeat brand names, as well as application programming interfaces to enhance workflows, project management needs, and search capabilities.
Last month, at the Visa Pour L’Image Festival in Perpignan, France, SSTK announced the renaming of The Newsroom to Splash. Since its launch in May 2021, the newsroom has established itself as a premier destination for unparalleled access to premium exclusive editorial content.
The newsroom’s unrivaled offering was further strengthened in May 2022 with the acquisition of Splash, an industry-leading source of image and video content for celebrity, red carpet and live events for over three decades.
For the second quarter ended June 30, 2022, SSTK revenue increased 9% year over year to $206.9 million. Subscribers grew 15% year over year to 368,000. The company’s average revenue per user increased 1% year-over-year to $359, while its image collection grew 9% year-over-year to 415 million images.
Street expects SSTK’s fiscal 2023 revenue and earnings per share to increase 8.6% and 8.6%, respectively, year over year to $839.91 million and $3.78, respectively. Additionally, SSTK’s earnings per share are expected to grow at a CAGR of 5% per year over the next five years. Additionally, the company has an impressive earnings surprise record, having beaten Street EPS estimates in three of the last four quarters.
SSTKs POWR ratings reflect these promising prospects. The company has an overall rating of B, which equates to a buy in our proprietary rating system. The POWR Ratings evaluate stocks based on 118 different factors, each with its own weighting.
SSTK also rated a B for growth, quality and value. Within the F rating Internet Services Industry, it is number 3 of 30 stocks. To view additional Stability, Momentum, and Sentiment POWR ratings for SSTK, click here.
data storage company (DTST)
DTST mainly serves the US market with multi-cloud information technology solutions. The company provides data protection and disaster recovery solutions, high availability, data vaulting, DRaaS, IaaS, message logic, standby servers, support and maintenance, and internet solutions.
For the second quarter ended June 30, 2022, DTST revenue increased 36.8% year over year to $4.83 million. It is gross profit increased 22.8% year over year to $1.85 million. The company reported cash and cash equivalents of $11.21 million for the six months ended June 30, 2021.
DTST’s EPS is expected to increase by 94.7% in the current fiscal year. Consensus estimate of $24.8 million in revenue for fiscal 2022 represents a 66.7% increase over the same period last year.
It’s no surprise that DTST has an overall B rating, which equates to a purchase in our POWR rating system. The stock also has an A grade for sentiment and a B grade for value and quality. In F rated Internet 6th out of 66 stocks in the industry.
In addition to the POWR Ratings grades just highlighted, you can view them DTST Ratings for Growth, Momentum and Stability.
Stock for sale:
Twitter Inc. (TWTR)
TWTR serves as a real-time platform for public self-expression and conversation. Twitter is the Company’s flagship product, a platform that enables users to consume, create, distribute and discover content.
The social media company sued Musk for allegedly breaching his bid to acquire the company. In connection with the litigation, a The process is scheduled to begin next week.
For the second quarter ended June 30, 2022, TWTR’s revenue declined 1.2% year over year to $1.18 billion. Operating loss was $343.76 million compared to operating income of $30.25 million in the same quarter last year. The company reported a net loss of $270 million compared to net income of $65.65 million for the second quarter of 2021. Loss per share was $0.35 compared to earnings per share of 0.08 in the year-ago quarter.
Analysts expect earnings per share to fall 27.3% in the next quarter through December 2022 and 46.4% in fiscal 2023. The stock is down 34.3% over the past year and 6.2% over the past month.
TWTR’s poor prospects are also reflected in its POWR ratings. The stock has an overall rating of D, which equates to a Sell in our proprietary rating system.
It also has a D grade for stability, mood, and dynamics. TWTR is ranked 45th in the internet industry. click here to view the additional POWR ratings for TWTR. (value, growth and quality).
SSTK shares traded at $50.07 per share on Thursday afternoon, down $1.33 (-2.59%). Year-to-date, the SSTK is down -54.34% versus a -20.09% gain in the benchmark S&P 500 over the same period.
About the author: Pragya Pandey
Pragya is an equity analyst and financial journalist with a passion for investing. She majored in finance in college and is currently completing the CFA program and is a Level II candidate. More…