U.S. internet stocks have been red-hot once again in 2019, gaining roughly 45% year-to-date.
Each month, Nomura Instinet analyst Mark Kelley tracks the latest trends in global internet usage by taking a look at Sensor Tower data for the month. In addition, Kelley looks at recent headlines to get a sense of which internet stocks are winning over users. Investors who get ahead of the curve by examining internet usage data can potentially get valuable insight heading into third-quarter earnings season for stocks.
With that in mind, here’s a list of Nomura Instinet’s top five internet stocks to buy now and their usage trends from the month of August.
Internet Stocks to Buy Now: Spotify (SPOT)
Spotify (NYSE:SPOT) was once again the most downloaded music streaming app in August. The Spotify app had more than 17.7 million downloads. Downloads were up 18% in August from a year ago — its lowest growth rate since February.
However, Spotify downloads again outpaced its closest global competitors in YouTube Music (12.3 million), JioSaavn Music (5.2 million) and Deezer (3.4 million). Kelley says Spotify’s 10% price hike in Norway doesn’t seem to have had a major impact on revenue or cancellations, potentially opening up the door for higher prices in other regions.
Nomura Instinet has a “buy” rating and $190 price target for SPOT stock.
One of the biggest overhangs for IAC stock this year has been the launch of a Facebook (NASDAQ:FB) dating service late last year. Kelley says the latest data suggests Tinder has not been negatively impacted by Facebook’s service. He says Facebook is a manageable risk for Match, and online dating is far from a “winner take all” market. Subsidiary Hinge was a major growth source in August, with year-over-year downloads up 56%.
Nomura Instinet has a “buy” rating and $314 price target for IAC stock.
Pinterest (NYSE:PINS) had 10.7 million downloads in August, up 18% from a year ago. The social media company also opened a new headquarters in Australia in August and reported a large earnings beat after making improvements to its platform.
Kelley is projecting a three-year compound annual revenue growth rate for Pinterest of 42% — the highest among the 12 internet media stocks under coverage and well above the 25% average growth rate of the group. Unlike some of its unprofitable peers, Kelley is also projecting annual net income growth of 45% as well.
Nomura Instinet has a “buy” rating and $39 price target for PINS stock.
Facebook and its advertising business just keep on trucking through all the political controversy, regulation, boycotts, lawsuits and antitrust probes.
FB stock is up another 42.8% in 2019. Facebook’s WhatsApp was the most downloaded social media app in August, with more than 57.2 million downloads. Messenger was a close second, with 55.3 million downloads. Facebook and Instagram trail behind with 52.5 million and 36.9 million downloads, respectively. While download growth on these four platforms slowed from a year ago, a clear sweep of the top four spots and a total of nearly 200 million downloads is extremely impressive.
Nomura Instinet has a “buy” rating and $235 price target for FB stock.
Behind the four Facebook platforms, YouTube was the most downloaded social media app in August with more than 23.3 million downloads. Surprisingly, users downloaded Google Search 8.2 million times in August, up 39% from a year ago. Search had previously not gotten more than 5.9 million downloads in any month during the past year. The Google Chrome app also got 6.4 million downloads in August.
Nomura Instinet has a “buy” rating and $1,400 price target for GOOGL stock.
As of this writing, Wayne Duggan did not hold a position in any of the aforementioned securities.