The importance of the Internet and social media is expected to keep increasing. During the pandemic, these have been instrumental in helping governments, economies, and communities around the world keep themselves running. With our world connected and business operations digitized like never before, Internet-enabled businesses will stay relevant and keep growing in the foreseeable future.
Social media giant Meta Platforms Inc. (META), formerly Facebook, builds applications and technologies that help people find communities and businesses to connect and grow. It operates through two segments: Family of Apps (FoA) and Reality Labs (RL).
Six senators sent a letter to META CEO Mark Zuckerberg at the end of last week stating they are "concerned that Meta provides a breeding ground for cryptocurrency fraud that causes significant harm to consumers." Furthermore, the company seems to prepare for a recession by laying off its employees and freezing new hires to contain costs.
For the second quarter of fiscal 2022, META’s revenue fell 0.9% year-over-year to $28.82 billion. During the same period, the company’s income from operations and net income decreased 32.4% and 35.7% year-over-year to $8.36 billion and $6.69 billion, respectively. Also, analysts expect META’s revenue and EPS for the third quarter to decline 40.7% and 4.7% year-over-year to $1.91 and $27.61 billion, respectively.
Hence, instead of META, we believe investors would benefit by investing in fundamentally strong Internet stocks Yelp Inc. (YELP) and Data Storage Corporation (DTST).
Yelp Inc. (YELP)
YELP operates a platform connecting consumers with local businesses in the United States and internationally. The advertising products offered by the company caters to local businesses of various sizes and categories, including restaurants, shopping, beauty and fitness, and health, as well as home, local, auto, professional, pets, events, real estate, and financial services.
During the fiscal 2022 second quarter ended June 30, 2022, YELP’s total revenues increased 16.2% year-over-year to $298.88 million. Its adjusted EBITDA grew 40% from its year-ago value to $67.32 million. As a result, net income attributable to common shareholders increased 90.1% from the previous year-quarter to $8 million, translating to a quarterly EPS of $0.11, up 120% year-over-year.
For the third quarter ending 30 September 2022, analysts expect YELP’s revenue to increase 14.2% year-over-year to $307.42 million. Street also expects EPS to improve marginally to $0.63. The stock has gained 16.6% over the past six months to close the last trading session at $36.31.
YELP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock also has an A grade for Quality and a B for Value. Within the Internet industry, it is ranked #2 of 64 stocks.
Click here for YELP’s additional POWR Ratings for Growth, Sentiment, Stability, and Momentum.
Data Storage Corporation (DTST)
DTST is a multi-cloud information technology solutions provider operating primarily in the United States. The company's offerings include subscription-based, long-term agreements for disaster recovery solutions, infrastructure-as-a-service (IaaS), cyber security, and voice and data solutions.
On May 10, DTST announced the partnership between its subsidiary, Flagship Solutions Group and Professional Fighters League for the 2022 season to utilize cloud-based products and artificial intelligence to reshape how fans engage with the sport. This collaboration is expected to add to the brand value of the company.
For the fiscal 2022 second quarter, which ended June 30, 2022, DTST’s revenue increased 36.8% year-over-year to $4.83 million. During the same period, the company’s gross profit came in at $1.85 million, up 22.8% from the previous-year quarter. As of June 30, 2022, total assets stood at $26.36 million, marginally up from December 31, 2021.
Analysts expect DTST’s revenue for the current fiscal year 2022 to come in at $24.80 million, up 66.7% year-over-year. Also, the company’s revenue for the next year is expected to increase 1.2% year-over-year to $25.10 million. The stock has gained 2.2% over the past five days to close the last trading session at $2.29.
DTST’s promising prospects are reflected in its POWR Ratings. The company has an overall B rating, which translates to a Buy in our proprietary rating system. It has a grade of A for Sentiment and B for Value and Quality. It is ranked #6 of 66 stocks in the same industry.
In addition to the above, we have given DTST ratings for Growth, Momentum, and Stability. Click here for all ratings of DTST.
META shares were trading at $153.24 per share on Tuesday afternoon, down $15.72 (-9.30%). Year-to-date, META has declined -54.44%, versus a -16.57% rise in the benchmark S&P 500 index during the same period.
About the Author: Santanu Roy
Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.
2 Internet Stocks You'll End up Liking More Than Meta StockNews.com
