1 Internet Stock for Long-Term Investors and 2 Facing Challenges

By breaking down physical barriers, consumer internet businesses are reshaping how people shop, connect, learn, and play. But it’s not all sunshine and rainbows as consumer purchasing power can make or break demand. Unfortunately, the market seems to believe stormy skies are ahead as the industry has shed 10.2% over the past six months. This performance is a noticeable divergence from the S&P 500’s 7.2% return.

Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. Keeping that in mind, here is one internet stock boasting a durable advantage and two we’re steering clear of.

Two Consumer Internet Stocks to Sell:

Take-Two (TTWO)

Market Cap: $39.38 billion

Best known for its Grand Theft Auto and NBA 2K franchises, Take Two (NASDAQ:TTWO) is one of the world’s largest video game publishers.

Why Are We Wary of TTWO?

1. Annual revenue growth of 7.1% over the last three years was below our standards for the consumer internet sector
2. Projected sales decline of 14.6% for the next 12 months points to a tough demand environment ahead
3. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital

At $245.91 per share, Take-Two trades at 28x forward EV/EBITDA. Read our free research report to see why you should think twice about including TTWO in your portfolio.

Revolve (RVLV)

Market Cap: $1.46 billion

Launched in 2003 by software engineers Michael Mente and Mike Karanikolas, Revolve (NYSE:RVLV) is a fashion retailer leveraging social media and a community of fashion influencers to drive its merchandising strategy.

Why Do We Think RVLV Will Underperform?

1. White space opportunities may be dwindling as its growth in active customers averaged a weak 5.8%
2. Expensive marketing campaigns hurt its profitability and make us wonder what would happen if it let up on the gas
3. Earnings per share lagged its peers over the last three years as they only grew by 7.5% annually

Revolve is trading at $23.12 per share, or 12.9x forward EV/EBITDA. Check out our free in-depth research report to learn more about why RVLV doesn’t pass our bar.

One Consumer Internet Stock to Buy:

Airbnb (ABNB)

Market Cap: $77.67 billion

Founded by Brian Chesky and Joe Gebbia in their San Francisco apartment, Airbnb (NASDAQ:ABNB) is the world’s largest online marketplace for lodging, primarily homestays.

Why Is ABNB a Top Pick?

1. Nights and Experiences Booked have increased by an average of 9.1% annually, giving it the potential for margin-accretive growth if it can develop valuable complementary products and features
2. Disciplined cost controls and effective management resulted in a strong two-year EBITDA margin of 35.3%, and its rise over the last few years was fueled by some leverage on its fixed costs
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends

Airbnb’s stock price of $146.91 implies a valuation ratio of 15.4x forward EV/EBITDA. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.