Cantor Fitzgerald analysts Youssef Squali, Naved Khan and Kip Paulson take a look at the valuation of these three companies, looking at top picks like Google and Facebook.
Our Cantor Internet Index (CII) outperformed the broader market this week and continues to trade at a 5-year high of 15.6x EV/NTM EBITDA, although the valuation remains below the ~18x seen back in 2006-07. This week, we heard generally upbeat commentary out of Yelp Inc (NYSE:YELP), Shutterstock Inc (NYSE:SSTK), Tripadvisor Inc (NASDAQ:TRIP), Yahoo! Inc. (NASDAQ:YHOO), Expedia Inc (NASDAQ:EXPE), Shutterfly, Inc. (NASDAQ:SFLY), LinkedIn Corp (NYSE:LNKD), and Netflix, Inc. (NASDAQ:NFLX) at various investor conferences. Taken together with strong secular tailwinds and impressive 4Q results (best we’ve seen in all of last year), we maintain a positive long-term bias on the group. Our top picks remain Google Inc (NASDAQ:GOOG), Facebook Inc (NASDAQ:FB), Expedia, and eBay Inc (NASDAQ:EBAY) (the latter as a value play).
Welcome to our latest issue of ValueWalk’s hedge fund update. Below subscribers can find an excerpt in text and the full issue in PDF format. Please send us your feedback! Featuring investors exit long-short hedge funds, the oil market is now "broken", and Haidar Capital surges 225%. Q2 2022 hedge fund letters, conferences and more
Cantor Internet Index outperforms
The Cantor Internet Index (CII) outperformed the broader market for the week ended 3/6. The CII increased 2.5% between Feb. 27-Mar. 5 vs. the S&P 500’s 1.4% increase over that time period. By sub-segment, Marketing increased 3.0% (TRIP +7.1%, YHOO +5.0%), Commerce increased 2.4% (OWW +4.4%), Subscriptions decreased 0.5%, and Infrastructure increased 1.1%.
Getty images plans to make 35M images available free
Getty Images plans to make 35M images available free of charge for non-commercial use, according to news reports, including the British Journal of Photography. Potential beneficiaries from such a move include self publishers (e.g., blogs). While Getty is aiming to address the unauthorized use of its images through this solution, we also note that availability of free images could, on the margin, reduce some demand for stock photos that were purchased on a one-off basis. That said, we do not expect to see a material impact on Shutterstock Inc (NYSE:SSTK)’s business given that Getty is mainly going after the low-volume, non-commercial users with its
Yahoo! to end Facebook and Google logins
Yahoo! inc. (NASDAQ:YHOO) to end Facebook Inc (NASDAQ:FB) and Google Inc (NASDAQ:GOOG) logins on its own properties, according to re/code and Reuters. The change will be rolled out gradually to Yahoo sites, including Fantasy Sports and Flickr, which will soon require a Yahoo ID to sign in. The move reverses a change made in 2011 by CEO Bartz. We view this news positively for Yahoo!, as we believe it should allow Yahoo! to control visitation/traffic analytics and increase the quality of information served to users over time.
Twitter reported 3.3B impressions worldwide
Twitter Inc (NYSE:TWTR) reported 3.3B impressions worldwide for #Oscars Tweets, according to Twitter’s blog and MarketingLand. Total impressions represents the number of times Tweets are displayed to users, whether on Twitter or other websites. Twitter further noted that 19.1M Tweets were sent by 5M+ people and viewed by 37+M people worldwide (vs. the 43M people who tuned into the Oscars). Ellen Degeneres’ selfie Tweet was retweeted over 3M times, and generated 32.8M impressions.
January Smartphone Visitation Up for Major Ad/E-Commerce Names, Checks Show
Our analysis of US mobile data (from comScore) shows that smartphone usage continued to see healthy growth in visitation and engagement for most major advertising and e-commerce players in January vs. 4Q:13. Given mobile’s growing share of overall visitations, if these trends are sustained into February and March, it would bode well for 1Q results for Facebook Inc (NASDAQ:FB), Google Inc (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN) and eBay Inc (NASDAQ:EBAY), in our view.
Our CII is trading at ~15.6x EV/NTM EBITDA (as of 3/5/14), at the high end of its 5-year rolling average range of roughly 6-15.6x, but this is still shy of pre-recession valuations of ~18x. We remain positive on the group longer term, based on an improving macro environment and superior relative growth and margin expectations out of this group over time.