2 Internet Stocks to Buy and 1 to Sell for Long-Term Success
Abstract:
Amid the rapid growth of the consumer internet industry, identifying long-term winners can be challenging. This article highlights two internet stocks with durable advantages and one with potential challenges.
1. Take-Two (TTWO): A Cautious Approach
Take-Two, a major video game publisher, has experienced declining profitability and a short cash runway. Its high valuation of 32.7x forward EV-to-EBITDA raises concerns for potential dilution of shareholder equity.
2. Roblox (RBLX): A Bright Future
Roblox has witnessed consistent growth in its Daily Active Users, indicating cross-selling opportunities. Its revenue outlook is exceptional, and conservative marketing expenses demonstrate cost-saving efforts. Despite a valuation of 61.1x forward EV-to-EBITDA, Roblox's potential for market share gains and profitability improvement make it an attractive investment.
3. Electronic Arts (EA): A Solid Choice
Electronic Arts, another video game publisher, boasts a strong platform and brand recognition. Its disciplined cost management and strong free cash flow margin provide ample room for reinvestment and shareholder returns. Priced at 12.7x forward EV-to-EBITDA, EA offers a compelling entry point for long-term investors.
Conclusion:
While Take-Two warrants caution, Roblox and Electronic Arts stand out as promising investments in the consumer internet space. Investors seeking long-term growth and stability should consider these two stocks for their portfolios.