The Zacks Internet – Content industry is a playground buzzing with digital opportunities. As the industry embraces the power of generative AI, players like Airbnb ABNB, Angi ANGI, and Perion Network PERI are riding the crest of social media, display, connected TV, and search to drive growth. However, lurking in the waters are global macroeconomic challenges. The ripples of inflation and soaring interest rates are dampening the sails of these industry participants. The ongoing geopolitical tensions in Russia, Ukraine, and Israel are casting ominous shadows over the industry’s horizon.

Exploring the Depths of the Industry

The Zacks Internet – Content industry is a vibrant ecosystem comprising providers of video encoding platforms, personal services, Internet content, and more. This ever-evolving landscape is fueled by changing consumer behavior and digitalization trends. Advertising remains a lifeboat for industry players seeking to capture the attention of their digital audience amidst the online cacophony. From the hustle of the United States to the bustle of Israel, the U.K., Germany, Russia, and China, these industry players are jostling for a piece of the digital pie.

3 Trends Setting the Wind for the Internet – Content Industry

Surging Demand for Digital Offerings: The industry is surfing on waves of technological change and evolving consumer standards. The expansion of mobile, digital, and cloud-based offerings is steering growth for industry participants. With smart devices proliferating and automation revolutionizing app development, the future looks promising.

Ad Spending Anchors Industry Prospects: Marketing endeavors are the compass guiding industry players toward website traffic and revenue growth. These companies rely heavily on advertising and subscriptions to keep their ships afloat. However, turbulent macroeconomic waters, lingering pandemic effects, inflation, and rising interest rates threaten to divert this course in the near term.

Regulatory Crosscurrents Pose Challenges: Online search and social networking activities face mounting regulatory headwinds, especially in China and the EU. The regulatory maze in China and the EU’s stringent data protection measures are adding complexity to an already choppy sea. The enactment of digital market regulations is further complicating matters for the industry.

Zacks Industry Rank: A North Star in the Storm

The Zacks Internet – Content industry, nestled in the broader Zacks Computer and Technology sector, proudly flaunts a Zacks Industry Rank of #28, placing it in the top 11% of Zacks industries. The industry’s sky-high Zacks Industry Rank paints a sunny picture for its near-term trajectory. Historical data suggests that the top-performing Zacks industries outshine the laggards by a wide margin.

Before we unveil the hidden treasures in this digital sea, let’s dive into the industry’s recent stock-market performance and valuation snapshot.

Industry Outpacing the Market and Sector

The Zacks Internet – Content industry has charted a course above the broader Zacks Computer and Technology sector and the S&P 500 index in the past year. Sailing at 13.1% growth, the industry has outstripped the 9.3% rise of the S&P 500 and the 12% surge of the broader sector.

One-Year Price Performance

The Industry’s Valuation Horizon

With a trailing 12-month price-to-sales ratio (P/S) of 7.4X, the Internet – Content industry stands at a premium compared to the S&P 500’s 4.06X and the sector’s 5.24X. Over the past five years, this industry has danced between P/S ratios of 4.75X to 14.64X, with a cozy median of 7.94X, as illustrated below.

Trailing 12-Month Price-to-Sales (P/S) Ratio

3 Hidden Gems to Pluck from the Internet Depths

Angi: Riding the waves of a robust service professional retention rate, Angi is set to expand its paid marketing margins. With digital revenues on the rise fueled by robust traffic and monetization, Angi anticipates over 10% digital growth through 2024.

Forecasting a revenue uptick in 2024, Angi is enhancing user experiences for both professionals and homeowners. While year-over-year revenue growth may be off the charts this year, strategic spending promises to lift the adjusted EBITDA margin beyond 10%.

The Zacks Consensus Estimate maintains a bullish outlook for this Zacks Rank #1 (Strong Buy) entity with a projected 2024 loss of 1 cent per share, a figure untouched in the past month. Angi shares have cruised to a 7.6% gain year-to-date.

Price and Consensus: ANGI