3 Internet Stocks in Hot Water
Whether it be online shopping or social media, secular forces are propelling consumer internet businesses forward. But it's not all sunshine and rainbows as consumer purchasing power can make or break demand. This unpredictability is weighing on returns as the industry has posted a flat return over the past six months, close to the S&P 500's performance.
Some companies can expand regardless of the economic backdrop, but the odds aren't great for the ones we're analyzing today. Keeping that in mind, here are three internet stocks we're passing on.
Market Cap: $42.96 billion
Best known for its Grand Theft Auto and NBA 2K franchises, Take Two (NASDAQ:TTWO) is one of the world's largest video game publishers.
Why Are We Hesitant About TTWO?
EBITDA margin fell by 8.3 percentage points over the last few years as it prioritized growth over profits
Earnings per share fell annually over the last three years while its revenue grew, showing its incremental sales were much less profitable
Long-term business health is up for debate as its cash burn has increased over the last few years
Take-Two is trading at $236.38 per share, or 19.8x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than TTWO.
Market Cap: $22.13 billion
Originally founded as a part of Microsoft, Expedia (NASDAQ:EXPE) is one of the world's leading online travel agencies.
Why Does EXPE Give Us Pause?
Customer spending has dipped by 1.8% on average as it focused on growing its bookings
Expensive marketing campaigns hurt its profitability and make us wonder what would happen if it let up on the gas
Free cash flow margin dropped by 23.4 percentage points over the last few years, implying the company became more capital intensive as competition picked up
At $174.73 per share, Expedia trades at 7x forward EV/EBITDA. Read our free research report to see why you should think twice about including EXPE in your portfolio, it's free.
Market Cap: $935.4 million
Aiming to simplify a once complicated process, EverQuote (NASDAQ:EVER) is an online insurance marketplace where consumers can compare and purchase various types of insurance from different providers
Why Does EVER Worry Us?
Excessive marketing spend signals little organic demand and traction for its platform
EverQuote's stock price of $25.55 implies a valuation ratio of 12.3x forward EV/EBITDA. To fully understand why you should be careful with EVER, check out our full research report (it's free).
Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
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