We recently compiled a list of 10 Best Internet Content Stocks to Buy. In this article, we will look at where DoorDash, Inc. (NASDAQ:DASH) ranks among the best internet content stocks.
According to Grand View Research, The global digital content creation market value stood at $25.6 billion in 2022 and is projected to grow at a CAGR of 13.5% from 2023 to 2030. In 2023, North America dominated the digital content market. The primary drivers are the increasing use of social media and the digital change occurring across different industries. According to a study by Kepios, 62.3% of individuals in the entire globe use social media. As of April 2024, the average daily usage is 2 hours and 23 minutes per this study. Kepios analysis reveals that the number of people using social media grew meaningfully during the first three months of 2024, and annual growth rates are still significantly more than 5%.
Content creation is also being transformed by artificial intelligence. According to Custom Market Insights, the global market for AI-powered content creation was valued at $2.3 billion in 2024 and is projected to grow at a compound annual growth rate of 7.7% to reach USD 7.9 billion by 2033. Moreover, AI programs like GPT-4 are being used to generate graphics, music, and text. Gartner projects that 30% of all digital content will be artificial intelligence generated by 2025. This facilitates hyperpersonalization, which allows material to be personalized to specific consumers while also streamlining the content creation process.
Secondly, the popularity of short-form video material is skyrocketing, emerging as a major trend in the content production industry. Platforms like Instagram Reels and TikTok have paved the way for this movement. In 2024, 85% of marketers anticipate short-form videos to be the most successful type of social media content, according to a HubSpot survey. The snackable aspect of this format makes it ideal for grabbing the attention spans of increasingly transient internet consumers.
Thirdly, digital content is projected to become more interactive in the future. Advancements in virtual reality (VR) and augmented reality (AR) are opening up greater opportunities for immersive experiences. The AR and VR market is expected to reach $1.5 trillion by 2030, according to a PwC report.
If we take a broader view, according to the PWC’s Global Entertainment & Media Outlook 2024-2028, there are a number of significant growth prospects in the industry, which is expected to reach US$3.4 trillion by 2028. Notwithstanding persistent upheavals and the necessity of reinventing company models, the industry presents substantial income opportunities. Growth is anticipated to be driven by advertising, with spending forecast to reach US $1 trillion by 2026 because of connected TV and internet advertisements. Due to market saturation, streaming services are being forced to investigate ad-supported business models and creative content. Revenues from gaming are predicted to surpass $300 billion by 2028, particularly in Asia Pacific. The industry is still thriving. Companies navigating shifting market dynamics will find more opportunities in high-growth regions and market categories.
Methodology:
We sifted through holdings of Internet Content ETFs and online rankings to form an initial list of 20 Internet Content stocks. Then we selected the 10 stocks that were the most popular among institutional investors. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
DoorDash, Inc. (NASDAQ:DASH)
Number of Hedge Fund Investors: 67
Through its internet-based platform, DoorDash, Inc. (NYSE:DASH) connects customers, restaurants, and drivers as an on-demand meal delivery service. Its emphasis on digital channels fits its business model into the “internet content & information” industry.
TimesSquare Capital U.S. Mid Cap Growth Strategy stated the following regarding DoorDash, Inc. (NASDAQ:DASH) in its Q2 2024 investor letter:
“Our preferences in the Consumer-oriented sectors lean toward value-oriented or specialty retailers, franchise models, or premium brands. New to the strategy was the online food delivery platform and logistics provider DoorDash, Inc. (NASDAQ:DASH) Since its IPO in 2021, the company’s scale has grown to entrench it with customers and consumers, though we have been cautious about its high valuation. Recently, the company reported lower-than-expected guidance for future margins and that caused its shares to sell off. In our view, DoorDash was appropriately investing for future growth and absorbing recent increased wage costs. Believing this short-term price dislocation made for an attractive entry price, we began buying, and DoorDash was up 2% through the end of the quarter.”
Moving forward, the company intends to supply not just food but nearly everything, including cosmetics, sports items, home décor, and alcohol, thereby increasing its overall market share. Long-term revenue growth is significantly fueled by this shift, which is critical. It has a $38.45 billion enterprise valuation, and even though DoorDash hasn’t finished expanding, it has managed to boost its sales by 22.3% YoY, showing significant demand for its products.
DoorDash has been investing to accelerate its growth, which has resulted in a negative net profit margin of -6%. Despite this short-term pressure on margins, the company has the potential to grow its revenues and eventually, its margins, which make it an attractive long-term investment as its non-food categories gain traction and the transformation matures over the coming years.
DoorDash is still a major player in the on-demand delivery space and its growing market share puts it in a strong position for growth in the future.
Andreas Halvorsen’s Viking Global is the largest stakeholder in the company from among the funds in Insider Monkey’s database. It owns 5,535,921 shares worth $602.20 million as of Q2.
Overall DASH ranks 8th on our list of the best internet content stocks to buy. While we acknowledge the potential of DASH as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DASH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published on Insider Monkey.
