In this article, we discuss the 5 undervalued internet stocks with huge upside. If you want to read our detailed analysis of these stocks, go directly to ‘The Next Facebook’: 10 Undvervalued Internet Stocks with Huge Upside.
5. Match Group, Inc. (NASDAQ: MTCH)
Number of Hedge Fund Holders: 68
Match Group, Inc. (NASDAQ: MTCH) is ranked fifth on our list of 10 undervalued internet stocks with huge upside. The company operates from Texas and provides dating products. According to Qingshan Capital Management, the upside potential of the stock is significant and the firm is expected to post sales growth for the next four years. The bullish analysis also highlights how the company is posting growth numbers from every part of the world and the stock looks attractively priced if the interest rates remain low and market volatility does not increase in the short term.
On August 5, investment advisory Morgan Stanley maintained an Overweight rating on Match Group, Inc. (NASDAQ: MTCH) stock with a price target of $180, identifying a recent pullback in price following soft quarterly results as a buying opportunity.
At the end of the first quarter of 2021, 68 hedge funds in the database of Insider Monkey held stakes worth $2.9 billion in Match Group, Inc. (NASDAQ: MTCH), down from 72 in the preceding quarter worth $3.7 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Match Group, Inc. (NASDAQ: MTCH) was one of them. Here is what the fund said:
“In addition to the new issue market, we have been tactically adding growth exposure. Our largest new position was Match Group, the global leader in the online dating space that was spun off by Interactive Corp. in 2020. Singles have put their life plans on hold during the pandemic but continue to want to meet people. Match was negative impacted by COVID, especially in markets like India, but the business is very profitable with high margins and is driving growth through international expansion, increasing users and better monetization and engagement.”
4. Snap Inc. (NYSE: SNAP)
Number of Hedge Fund Holders: 73
Snap Inc. (NYSE: SNAP) is a California-based camera company. It is placed fourth on our list of 10 undervalued internet stocks with huge upside. According to MangoTree, a tech-centric market expert, the company can still expect to drive advertising revenue from innovations within the platform that other social media firms have already maximized. The user growth of the company has also shown no signs of slowing down, the expert contends, noting that the stock has been undervalued in analyst ratings in the reopening plays.
On July 23, investment advisory Jefferies maintained a Buy rating on Snap Inc. (NYSE: SNAP) stock and raised the price target to $90 from $81, noting that the guidance for the firm appeared conservative given year-over-year growth in quarterly revenues.
Out of the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Lone Pine Capital is a leading shareholder in Snap Inc. (NYSE: SNAP) with 24 million shares worth more than $1.2 billion.
In its Q2 2021 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and Snap Inc. (NYSE: SNAP) was one of them. Here is what the fund said:
“Snap shares were a top contributor for the quarter as well, also driven by strong first quarter results. The company reported accelerating revenue growth of 66% for the period (up from 62% fourth quarter growth), driven by user growth of 22%, and a 36% expansion in average revenue per user (ARPU). The company also guided to stronger-than-expected and accelerating 81%-85% revenue growth for second quarter 2021. Adjusted EBITDA improved by $79 million year over year for a break-even margin, up 1,800 basis points, and free cash flow improved dramatically, turning positive for the period to $126 million. Snap also continued to roll-out products that should help drive further expansion in user growth and ARPU, including Spotlight, a TikTok-like experience, with more than 125 million Snapchatters using it during March, and original programming starring Ryan Reynolds.
With TTM of $2.8 billion in revenue and an ARPU that is about 1/2 that of Twitter and 1/3 that of Facebook, we believe Snap has a long runway for both revenue growth and expanded profitability as it improves its platform functionality, grows its audience, and continues to advance its monetization.”
3. Pinterest, Inc. (NYSE: PINS)
Number of Hedge Fund Holders: 83
Pinterest, Inc. (NYSE: PINS) is a California-based company that owns and operates a visual discovery engine. It is ranked third on our list of 10 undervalued internet stocks with huge upside. According to Dilantha De Silva, a finance expert specializing in US-based equities, has noted that the drawdown in the stock after slowed user growth was an overreaction, underlining that the pandemic frenzy in tech was nearing an end and this was just a normalization. The bullish thesis also underlined the opportunity for growth that international markets offered to the firm. Presently, about 22% of the revenue of the company comes from international business, with the bull case underlining this could grow substantially in the coming years.
On July 30, investment advisory Morgan Stanley maintained an Overweight rating on Pinterest, Inc. (NYSE: PINS) stock but lowered the price target to $77 from $83, noting that user uncertainty would weigh on the minds of investors despite shopping trends in the right direction.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Alkeon Capital Management is a leading shareholder in Pinterest, Inc. (NYSE: PINS) with 6.8 million shares worth more than $506 million.
In its Q1 2021 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and Pinterest, Inc. (NYSE: PINS) was one of them. Here is what the fund said:
“Pinterest is an operator of a pinboard-style social media website that enables users to create theme-based image collections for events, hobbies, and other personal interests. The firm delivered another quarter of both earnings and forward guidance above investor expectations, sending shares higher. Strength was driven by notable user growth and a return of advertising spending. We remain excited about an increase in video content, new analytics tools for advertisers, and an increasing shift towards ecommerce.”
2. Twilio Inc. (NYSE: TWLO)
Number of Hedge Fund Holders: 99
Twilio Inc. (NYSE: TWLO) is placed second on our list of 10 undervalued internet stocks with huge upside. The firm operates a cloud communications platform and is headquartered in California. According to Arne Verheyde, a market expert in growth firms, the firm remains slated for long-term revenue growth and will continue to beat market expectations in this regard for years to come. The bull case for the company has underlined that the firm remains in position to achieve a market cap target of over $100 billion.
On July 30, investment advisory Baird maintained an Outperform rating on Twilio Inc. (NYSE: TWLO) stock but raised the price target to $450 from $430, noting the strong competitive position the firm was in and identifying it as one the top picks of the advisory.
Out of the hedge funds being tracked by Insider Monkey, California-based investment firm SCGE Management is a leading shareholder in Twilio Inc. (NYSE: TWLO) with 2.7 million shares worth more than $948 million.
1. Twitter, Inc. (NYSE: TWTR)
Number of Hedge Fund Holders: 107
Twitter, Inc. (NYSE: TWTR) is ranked first on our list of 10 undervalued internet stocks with huge upside. The company is based in California and owns a social networking platform. According to Vishesh Raisinghani, a market expert focusing on the technology sector, the stock is the perpetual underdog but remains in position to achieve a price target of $100. The expert underlined the recent induction of Paul Singer, a legendary investor with a reputation for ruthless management decisions, to the board as one of the potential upside for the firm in the long term. Raisinghani notes how his introduction has already resulted in several new innovations by the company in recent months.
On July 30, investment advisory BMO Capital reiterated a Market Perform rating on Twitter, Inc. (NYSE: TWTR) stock and raised the price target to $70 from $65, noting that the rating was neutral but could change as results of advertising and ecommerce products of the firm rolled out.
At the end of the first quarter of 2021, 107 hedge funds in the database of Insider Monkey held stakes worth $4.5 billion in Twitter, Inc. (NYSE: TWTR), up from 78 in the preceding quarter worth $2.7 billion.
RGA Investment Advisors, in its Q1 2021 investor letter, mentioned Twitter, Inc. (NYSE: TWTR). Here is what the fund has to say in its letter:
“‘The bird has wings’—Twitter’s quarter started off somewhat ominously, with Twitter the worst performing stock in the S&P 500 following the January 6th insurrection and questions about the stickiness of the userbase after permanently suspending the account of President Trump.8 By the end of the quarter, Twitter was one of the best performers in the index after exceptionally strong fourth quarter earnings and guidance for the year and an upbeat analyst day that highlighted a rapidly evolving product roadmap placing the timeline at the center of ephemeral (fleets), long form (Revue) and voice (Spaces). The improvements to the experience makes the platform more accessible and provides more opportunity to continue growing the userbase. Importantly, Twitter also embraced what we have been calling “creative empowerment” in previewing SuperFollows and a host of features designed to help content creators and contributors monetize their own audience on Twitter itself. These developments, alongside considerable progress on the advertising platform give us growing conviction that Twitter will deliver on its largely untapped opportunity—in other words, the value creation opportunity on top of the low multiple we were able to build our position at. Elliot spoke at length about these developments on Yet Another Value Podcast with Andrew Walker and The Business Brew with Bill Brewster, which we invite you to check out.”
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