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 1.9%. This performance is a stark contrast from the S&P 500’s 10.1% gain.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. With that said, here are two internet stocks we think can generate sustainable market-beating returns and one we’re steering clear of.
One Consumer Internet Stock to Sell:
Take-Two (TTWO)
Market Cap: $44.37 billion
Best known for its Grand Theft Auto and NBA 2K franchises, Take Two (NASDAQ:TTWO) is one of the world’s largest video game publishers.
Why Are We Wary of TTWO?
- Estimated sales growth of 4.9% for the next 12 months implies demand will slow from its three-year trend
- Issuance of new shares over the last three years caused its earnings per share to fall by 487% annually while its revenue grew
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
At $240.50 per share, Take-Two trades at 47.9x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than TTWO.
Two Consumer Internet Stocks to Watch:
Robinhood (HOOD)
Market Cap: $97.78 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 Is HOOD a Good Business?
- Customer spending is rising as the company has focused on monetization over the last two years, leading to 47.7% annual growth in its average revenue per user
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 58.5% annually, topping its revenue gains
- Strong free cash flow margin of 49.6% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy
Robinhood is trading at $108.78 per share, or 31.1x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
Coinbase (COIN)
Market Cap: $65.03 billion
Widely regarded as the face of crypto, Coinbase (NASDAQ:COIN) is a blockchain infrastructure company updating the financial system with its trading, staking, stablecoin, and other payment solutions.
Why Is COIN Interesting?
- Monthly Transacting Users have grown by 11.7% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Strong engagement trends coupled with 55% annual growth in its average revenue per user demonstrate its platform’s stickiness with die-hard customers
- Superior platform functionality and low servicing costs result in a best-in-class gross margin of 85.9%
Coinbase’s stock price of $241.15 implies a valuation ratio of 19.2x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.