Internet Stocks Halt Their September Rally
Although it has been a struggle this year for many popular Internet companies, September has provided a nice bounce to the sector. However, that bounce is in jeopardy as renewed concerns and downgrades take place.
Despite rallying more than 20 percent this month, shares of Facebook (NASDAQ:FB) declined more than 2 percent on Monday. Google (NASDAQ:GOOG) said it bought Nik Software, which makes Snapseed, a photo application that competes with Facebook’s Instagram. “We want to help our users create photos they absolutely love, and in our experience Nik does this better than anyone,” explains Google executive Vic Gundotra, on a Google+ post. He also celebrated that Google+ just achieved 100 million monthly active users.
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Snapseed won Apple’s (NASDAQ:AAPL) “iPad App of the Year” award in 2011 and had 9 million users in its first year. It also won “Best Mobile Photo App 2012.” While Facebook has been criticized for its lack of mobile monetization, Google’s acquisition is a clear step towards the direction of monetizing the explosion in social media. Users are already willing to pay for Snapseed, as it carries a price tag of $4.99.
Through the end of last week, shares of Groupon (NASDAQ:GRPN) and OpenTable (NASDAQ:OPEN) had surged 27 percent and 16 percent in September, respectively. However, both companies received a strong pullback on Monday after comments from analysts. Ken Sena, an analyst at Evercore Partners, said in a research note that Groupon is likely to “see overall margin expansion and cash flow growth as tenuous. Marketing expenses are on the rise given daily-deal fatigue.” He also has an Underweight rating on shares with a $3 price target. Groupon closed almost 10 percent in the red.
OpenTable shares finished 5.5 percent lower on Monday. The reservation technology company received a downgrade from Piper Jaffrey analyst Michael Olson. He cut his rating on shares to Neutral from Overweight, but increased his price target to $49, up from $45. Olso noted that several diner metrics indicate a slight deceleration in industry trends and given the recent rise in OpenTable’s stock price, shares are “fairly valued.”
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