Tech stocks have been making a comeback after being hard hit by the extended market weakness earlier this year. This is evident in the benchmark tech-heavy Nasdaq Composite index's 10.3% gains over the past five days. The latest Fed rate increase hike caused equities to gain momentum, because investors and economists have been predicting the rate increase for quite some time.
With the pandemic necessitating more remote work, internet usage is increasing at an extraordinary rate worldwide. However, technology access is becoming cheaper each day despite the skyrocketing inflation rates. In fact, broadband prices have declined over the past five years. Furthermore, with companies adopting hybrid working models globally and integrating more advanced technology, the demand for high-speed internet connections is expected to grow.
Given this backdrop, Wall Street analysts expect quality internet stocks Snap Inc. (SNAP), DoorDash, Inc. (DASH), Twilio Inc. (TWLO), IAC/InterActiveCorp (IAC), and Angi Inc. (ANGI) to rally by more than 45% in price in the coming months.
Snap Inc. (SNAP)
SNAP is a Venice, Calif.-based camera company that is known for its flagship social media platform, Snapchat, which connects people worldwide through short videos and images. Its advertising products include Snap Ads and augmented reality (AR) Ads.
On Feb. 9, SNAP raised $1.30 billion through an upsized convertible senior notes offering to qualified institutional investors. The company included a provision that allows institutional buyers to purchase an additional $200 billion worth of senior notes. The proceeds are expected to fund SNAP's general corporate expenses, working capital and operating expenses, and CapEx.
Last month, SNAP invested in Aleph Group, Inc to support Aleph's digital advertising education, training, and certification in 90 countries. The minority investment should allow SNAP to localize its presence in the market to advertisers and expand its presence in key regions across South America, Europe, the Middle East, Africa, and the Asia Pacific.
During the fourth quarter, ended Dec. 31, 2021, SNAP's revenue increased 42% year-over-year to $1.30 billion. Its Daily Active Users increased 20% year-over-year to 319 million. The company's adjusted EBITDA increased 97% year-over-year to $326.79 million. And its cash and cash equivalents balance stood at $1.99 billion as of December 31, up 265.4% from the same period last year.
The $5.66 billion consensus revenue estimate for its fiscal 2022 indicates a 37.4% improvement year-over-year. The Street expects the company's EPS to rise 4.6% to $0.52 in the current year.
Over the past five days, the shares of SNAP gained 28.8% in price to close Friday's trading session at $36.00.
Among 29 analysts that rated SNAP, 20 rated it Buy while nine rated it Hold. The 12-month median price target of $53.26 indicates a 48% potential upside from the last closing price of $36.00. The price targets range from a low of $36.00 to a high of $93.00.
DoorDash, Inc. (DASH)
San Francisco’s DASH is a local logistics platform that connects merchants, consumers, and dashers. Its operations include DoorDash marketplace, DoorDash Drive, and DoorDash Storefront.
In March, DASH entered an agreement to acquire hospitality technology startup Bbot. The start-up's best-in-class features and customizable tools should allow DASH to serve merchant needs better, thereby increasing its customer base across the hospitality industry.
In February, in partnership with Albertsons Companies (ACI), DASH launched an express grocery delivery service that offers fresh groceries in less than 30 minutes in more than 20 major cities across the U.S. This new service launch is expected to be a major hit among customers, thereby boosting DASH's revenue streams.
In the fourth quarter, ended Dec. 31, 2021, DASH's revenue increased 34% year-over-year to $1.30 billion. Its total orders grew 35% year-over-year to $369 million, while its marketplace GOV increased 36% year-over-year to $11.20 billion. The company's gross profit increased 34% a year ago value to $637 million.
The $1.45 billion consensus revenue estimate for the fiscal second quarter (ending June 2022) represents a 17.1% increase from the same period last year. Analysts expect the company's EPS to rise 420.1% in the same period.
DASH has gained 41.4% in price over the past five days to close Friday's trading session at $107.29.
Among the 16 Wall Street analysts that rated DASH, nine rated it Buy while seven rated it Hold. The 12-month median price target of $164.21 indicates a 53.1% potential upside from the last closing price of $107.29. The price targets range from a low of $118.00 to a high of $230.00.
Twilio Inc. (TWLO)
TWLO and its subsidiaries provide a cloud communication platform that enables developers to build, scale and operate real-time communications within software applications. It also offers a customer engagement platform with software designed to address specific issues, like account security and contact centers and a set of APIs.
According to TWLO's 2021 Impact and DEI Report, approximately 7,624 organizations used the platform and funding to help 511 million people last year, representing a 92% year-over-year increase in people reached.
Last December, TWLO launched Twilio Ventures with $50 million to invest in early-stage customer engagement companies. Such angel investments in high-growth companies are expected to generate robust ROI.
TWLO's total revenue increased 54% year-over-year to $842.74 million in its fiscal fourth quarter, ended Dec. 31, 2021. The company's gross profit came in at $446.20 million, reflecting a 67.8% rise from the prior-year quarter.
Analysts expect TWLO's revenue to increase 36.2% year-over-year to $3.84 billion in fiscal 2022. The consensus EPS estimate for the current year indicates a 95% improvement from the same period last year.
Shares of TWLO have gained 27.5% in price over the past five days. Also, the 12-month median price target of $323.33 indicates a 102.5% potential upside from the last closing price of $159.66. The price targets range from a low of $240.00 to a high of $510.00. Among the 26 Wall Street analysts that rated TWLO, 25 rated it Buy while one rated it Hold.
Click here to check out our Cloud Computing Industry Report for 2022
IAC/InterActiveCorp (IAC)
IAC is a media and internet company globally. It operates in four segments: Dotdash Meredith; Angi Inc.; Search; and Emerging & Other. The New York City company publishes digital content in the form of articles, illustrations, videos, and images across entertainment, food, home, beauty, travel, health, family, luxury, and fashion areas, and magazines related to women and lifestyle.
IAC's revenue increased 34% year-over-year to $3.70 billion in its fiscal year 2021, ended December 31. Its net earnings attributable to shareholders grew 124% from its year-ago value to $603.31 million, while its EPS increased 115% from its year-ago value to $6.37.
The $5.77 billion consensus revenue estimate for its fiscal year 2022 indicates a 56% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
Shares of IAC have risen 11.3% in price over the past five days to close the last trading session at $105.06.
The 10 Wall Street analysts that rated IAC each gave it a Buy rating. The 12-month median price target of $167.60 indicates a 59.5% potential upside from the last closing price of $105.06. The price targets range from a low of $145.00 to a high of $185.00.
Angi Inc. (ANGI)
Incorporated in 2017, ANGI in Indianapolis, Ind., focuses on creating a digital marketplace for home services, connecting homeowners across the globe with home service professionals. It operates under eight brands: Angie's List, HomeAdvisor, HomeStars, Instapro, MyBuilder, MyHammer, Travaux, and Werkspot.
ANGI repurchased one million Class A common shares at an average price of $7.80 each between Nov. 4, 2021, and Feb. 11, 2022. This should boost the company's ROE and EPS in the coming quarters.
During the fourth quarter, ended Dec. 31, 2021, ANGI's revenue increased 16% year-over-year to $415.86 million. This can be attributed to a 116% growth in Angi Services revenue and a 3% rise in monetized transactions.
Analysts expect ANGI's EPS to increase 7% year-over-year in its fiscal second quarter, ending June 30, 2022. The consensus revenue estimate of $483.25 million for the second quarter represents a 14.8% increase from the same period last year.
Over the past five days, the stock has gained 7% in price. ANGI is expected to hit $12.06 soon, reflecting a 96.1% potential upside from Friday's closing price of $6.15. The price targets range from a low of $8.00 to a high of $15.00. Among 10 Wall Street analysts that rated ANGI, seven rated it Buy while three rated it Hold.
SNAP shares were trading at $34.93 per share on Monday afternoon, down $1.07 (-2.97%). Year-to-date, SNAP has declined -25.73%, versus a -6.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.
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