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2 Internet Stocks Worth Your Attention and 1 Facing Headwinds
Whether it be online shopping or social media, secular forces are propelling consumer internet businesses forward. This influence cuts both ways though because they have high exposure to the ups and downs of consumer spending, and the market seems to believe the tide is turning in the wrong direction - over the past six months, the industry has tumbled by 2.2%. This drop is a noticeable divergence from the S&P 500’s 8.9% return.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. Taking that into account, here are two internet stocks we think can generate sustainable market-beating returns and one we would avoid.
One Consumer Internet Stock to Sell:
Chewy (CHWY)
Market Cap: $8.43 billion
Founded by Ryan Cohen, who later became known for his involvement in GameStop, Chewy (NYSE:CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.
Why Are We Hesitant About CHWY?
- Annual sales growth of 6.5% over the last three years lagged behind its consumer internet peers as its large revenue base made it difficult to generate incremental demand
- Projected sales growth of 7% for the next 12 months suggests sluggish demand
- Gross margin of 29.7% is below its competitors, leaving less money to invest in areas like marketing and R&D
Chewy’s stock price of $20.88 implies a valuation ratio of 9.5x forward EV/EBITDA. If you’re considering CHWY for your portfolio, see our FREE research report to learn more.
Two Consumer Internet Stocks to Watch:
Booking (BKNG)
Market Cap: $122.8 billion
Formerly known as The Priceline Group, Booking Holdings (NASDAQ:BKNG) is the world’s largest online travel agency.
Why Do We Like BKNG?
- Superior platform functionality and low servicing costs lead to a best-in-class gross margin of 87%
- Disciplined cost controls and effective management resulted in a strong two-year EBITDA margin of 36.4%, and its operating leverage amplified its profits over the last few years
- Robust free cash flow margin of 35.3% gives it many options for capital deployment
At $163.47 per share, Booking trades at 11.6x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Airbnb (ABNB)
Market Cap: $102.4 billion
Founded by Brian Chesky and Joe Gebbia in their San Francisco apartment, Airbnb (NASDAQ:ABNB) is the world’s largest online marketplace for lodging, primarily homestays.
Why Will ABNB Outperform?
- Nights and Experiences Booked have grown by 9.3% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Healthy EBITDA margin of 35.6% shows it’s a well-run company with efficient processes, and its rise over the last few years was fueled by some leverage on its fixed costs
- ABNB is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Airbnb is trading at $173.17 per share, or 17.6x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.