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Thursday, October 28, 2021

5 Stocks Seize Limelight on International Internet Day

By Century Financial in Investment Insights

5 Stocks Seize Limelight on International...
5 Stocks Seize Limelight on International Internet Day

Internet's omnipresence in the digital era is paving the way for several futuristic technologies

Internet gradually became a disruptive force in transforming retail, healthcare, education, gaming, finance, communication, and several other sectors in unimaginable ways.

Interestingly, International Internet Day is celebrated on October 29 every year globally. The day highlights the sending of the first ever electronic message from one computer system to another in 1969.

The world has come a long way since then. In fact, it was the accessibility of Internet which acted as a major cushion amid the pandemic outbreak in March 2020, enabling economies around the globe to function.

Internet is facilitating the use of various platforms, be it for work-from-home, virtual healthcare web-based education, digital payment, e-commerce, streaming, online gaming, social media, to mention a few.

Harnessing the Power of Internet

Various emerging domains have encouraged several companies to follow a digital path to capitalize on the gains, backed by improvement in Machine Learning (ML) and cloud computing capabilities.

Domino's Pizza (DPZ), for instance, strengthened its online delivery model amid the shelter-in-place guidelines, raking in 31.6% gains in 2020. The company’s stock has gained 22.4% so far, this year, as of markets close on Oct 22.

Although, 2020 was the year that accelerated the use of internet-based services manifold, easing social distancing measures are an overhang.

However, in this Internet-driven era, use of these services have enhanced both cost and time efficiency and therefore, the demand is here to stay. Also, increase in COVID cases owing to spread of Delta Plus variant and lingering impacts make the use of internet-based services inevitable.

The democratization of Internet has led to the increasing popularity of wearables. Sensors, drones, Internet-of-Things (IoT) powered devices, are channelling the effectiveness of Internet to drive meaningful transformation across industries.

Further, to prevent the misuse of information in this data-driven era, has resulted in an ever-growing cybersecurity industry.

First Trust Dow Jones Internet ETF (FDN), tracking the performance of notable Internet-based companies, has gained 14.9%, so far, this year. It provides a testament to the investors’ confidence in Internet stocks.

The latest update provided by InternetWorldStats, states that the global Internet penetration was 65.6% as of March 31, 2021. Rapid deployment of 5G is expected to magnify opportunities for the Internet-based companies in the days ahead.

Let us discuss five Internet-based companies providing services across various domains and the key catalysts driving the performance on the bourses.

Expanding customer base: The company’s customer base increased 40% YoY to 121,048, as of Jun 30, 2021, which resulted in revenue growth of 47% on a constant currency basis in second-quarter 2021.

Growth in International revenues: International revenues surged 54% at cc, YoY, in Q2. This metric is significant for any internet-based stock and highlights the global expansion efforts.

Subscriber Base Growth: Subscribers increased 44% YoY to 321,000, driving revenues up by 19% to $189.9 million in second-quarter 2021.

Launch of Shutterstock.AI: The company acquired leading artificial intelligence platforms to launch Shutterstock.AI. Acquisitions of Pattern89, Datasine and Shotzr expected to help boost predictive performance capabilities and enhance creatives.

GMV & MRR Acceleration: Monthly Recurring Revenue ("MRR") as of June 30, 2021, was $95.1 million up 67% YoY on increasing contribution from Shopify Plus driven by growth in utilization of Retail POS Pro subscription offering. Gross Merchandise Volume ("GMV") for Q2 was $42.2 billion, an increase of 40% YoY.

Efforts to Boost Shopify Fulfillment Network: Shopify continues to enhance Shopify Fulfillment Network by introducing features to help merchants streamline the products fulfilled on the network, improve shipping speed and accuracy. Synergies from 6 River Systems acquisition continue to remain a contributing factor.

Easing Travel Restrictions: The company is expected to gain from continued improvement across many global travel segments with significant strength in North America.

Lodging Revenue Growth: Strong vacation rental performance and improvement in conventional lodging is a key catalyst. However, recent increase in new COVID cases around the world remains an overhang.

Momentum in convenience delivery: The company is benefiting from robust utilization of its online food ordering and food delivery platform. Total Orders grew 69% YoY to 345 million in second-quarter 2021, bolstering revenues by 83% YoY to $1.2 billion.

New additions to marketplace categories: The company added new customers across categories including restaurants, grocery, convenience, pets, and alcohol. Expanding Marketplace partner base and enhancing productization, and logistics, is enabling the company to gain a competitive edge.

Ticker Domain CMP Market Cap YTD Return
HUBS Inbound marketing and CRM tools $814.16 $38.27 B 109.9%
SHOP All-in-one commerce platform to start, run, and grow a business $1,425.85 $177.96 B 30.5%
DASH Door-to-door delivery for merchants, consumers, and Dashers $213.83 $72.26 B 53.6%
EXPE Online travel websites for consumer and small business travel $161.67 $24.38 B 23.1%
SSTK Provides content, and image services used in visual communications $122.42 $4.53 B 53.6%

Data: As of Markets Close on Oct 22, 2021

Disclaimer: Century Financial Consultancy LLC (“CFC”) is Limited Liability Company incorporated under the Laws of UAE and is duly licensed and regulated by the Emirates Securities and Commodities Authority of UAE (SCA). Services offered by CFC include promotion and introduction of financial market products that are traded on margin and can result in losses that exceed deposits. Trading with leverage carries significant risk of losses and as such margin products may not be suitable for everyone; you should consider your investment objectives, risk tolerance and your level of experience with these products, and ensure that you understand the risks involved and seek independent advice from professionals/experts if necessary. CFC is not responsible or liable for any result, gain or loss, based on this information, in whole or in part. Refer to our risk disclosure.

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