Internet_ Where Are We Trading Now_ Starting Off 2025

Industry Overview * Internet Sector Performance: The internet sector experienced a flat performance last week, with the S&P 500 and NASDAQ indices remaining unchanged, while the Dow Jones Industrial Average fell by 1%. Notable outperformers included SNAP (+9%), CHWY (+6%), UBER (+6%), and LYFT (+7%). * Valuation Multiples: The valuation multiples for AMZN, GOOGL, and META were 34x, 21x, and 23x, respectively, for 2025 EPS, compared to TTM averages of -7%, -1%, and flat, respectively. * Sector Outlook: Morgan Stanley maintains an attractive outlook for the internet sector in North America. Company Analysis * Digital Media: The digital media sector saw significant growth in EV/EBITDA multiples, with an average increase of 40% when treating SBC as cash. Notable companies in this sector include BMBL, CRTO, META, GOOGL, IAS, KIND, MTCH, PINS, SSTK, TTD, DV, RDDT, and YELP. * eCommerce/Marketplace: The eCommerce sector also experienced a notable increase in EV/EBITDA multiples, with an average increase of 22% when treating SBC as cash. Notable companies in this sector include AMZN, CHWY, EBAY, ETSY, FIGS, PTON, RVLV, WW, CART, DASH, and LYFT. * Shared Economy/Rideshare: The shared economy/rideshare sector saw a moderate increase in EV/EBITDA multiples, with an average increase of 5% when treating SBC as cash. Notable companies in this sector include CART, DASH, LYFT, and UBER. * Gaming/Mobile App: The gaming/mobile app sector experienced a significant increase in EV/EBITDA multiples, with an average increase of 26% when treating SBC as cash. Notable companies in this sector include APP, EA, PLTK, RBLX, TTWO, and U. * Travel: The travel sector saw a moderate increase in EV/EBITDA multiples, with an average increase of 42% when treating SBC as cash. Notable companies in this sector include ABNB, BKNG, DASH, EXPE, LYFT, UBER, and Z. * Real Estate Tech: The real estate tech sector saw a significant increase in EV/EBITDA multiples, with an average increase of 42% when treating SBC as cash. Notable companies in this sector include COMP, Z, OPEN, and RE Tech. Valuation Methodology * EV/EBITDA Multiples: The report utilizes EV/EBITDA multiples to value companies in the internet sector, comparing them to historical averages and industry benchmarks. * EV/Sales Multiples: The report also considers EV/Sales multiples as a valuation metric, comparing them to historical averages and industry benchmarks. Conclusion The report provides a comprehensive analysis of the internet sector in North America, highlighting key trends, company performance, and valuation metrics. The attractive outlook for the sector is supported by strong growth in EV/EBITDA multiples across various sub-sectors.