By breaking down physical barriers, consumer internet businesses are reshaping how people shop, connect, learn, and play. Luckily for them, the market seems to believe there is a long runway for growth as the industry has recorded a 3.7% gain over the past six months while the S&P 500 was stuck in neutral.
Although these companies have produced results, only those with the widest moats will survive as emerging red-hot players pop up regularly to take their slice of the pie. On that note, here are two internet stocks boasting durable advantages and one we’re passing on.
One Consumer InternetStock to Sell:
Amazon (AMZN)
Market Cap: $2.21 trillion
Founded by Jeff Bezos after quitting his stock-picking job at D.E. Shaw, Amazon (NASDAQ: AMZN) is the world’s largest online retailer and provider of cloud computing services.
Why Does AMZN Fall Short?
- Amazon revolutionized the way consumers shop. But its capital-intensive online retail business caps its profitability, leading to margins that lag behind its Magnificent 7 peers.
- Although Amazon Web Services is a gold mine producing mission-critical infrastructure, its outsized scale limits its growth rate compared to smaller peers such as Microsoft Azure and Google Cloud Platform.
- Returns on invested capital are well below their pre-COVID peak as the company is in the middle of an investment cycle. Will Amazon ever harvest profits or keep pushing them to the future?
Amazon’s stock price of $210.68 implies a valuation ratio of 32.7x forward price-to-earnings. If you’re considering AMZN for your portfolio, see our FREE research report to learn more.
Two Consumer Internet Stocks to Watch:
Match Group (MTCH)
Market Cap: $7.59 billion
Originally started as a dial-up service before widespread internet adoption, Match (NASDAQ: MTCH) was an early innovator in online dating and today has a portfolio of apps including Tinder, Hinge, Archer, and OkCupid.
Why Are We Positive On MTCH?
- Monetization efforts are paying off as its average revenue per user has grown by 9.5% annually over the last two years
- Share repurchases over the last three years enabled its annual earnings per share growth of 28% to outpace its revenue gains
- MTCH is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
At $31.40 per share, Match Group trades at 6.6x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
Robinhood (HOOD)
Market Cap: $67.38 billion
With a mission to democratize finance, Robinhood (NASDAQ: HOOD) is an online consumer finance platform known for its commission-free stock and crypto trading.
Why Should You Buy HOOD?
- Customers are spending more money on its platform as its average revenue per user has increased by 43.1% annually over the last two years
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 64.6% annually, topping its revenue gains
- Free cash flow margin increased significantly over the last few years, giving the company more capital to invest or return to shareholders
Robinhood is trading at $77.98 per share, or 34.6x forward EV/EBITDA. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.
