Our primary line of business is Internet-related equity analysis. Our coverage universe includes approximately sixty companies, with a focus on mid-cap consumer Internet names.
Why We Need Internet Analysts
Internet equity analysis fits into roughly three stages:
- The golden age from 1996-2000: lots of new ideas, lots of new metrics—a Cambrian explosion with plenty of mutation and plenty of justified extinction. This golden age wasn’t golden in terms of the median quality of analysis, but it was also the era that produced Mary Meeker’s The Internet Report, Henry Blodget’s Amazon.com call, and other solid pieces of novel analysis. Internet analysis was often unmoored from reality, but it was alwaysunmoored from traditional business metrics.(And the attendant equity bubble fueled investment in the infrastucture behind later growth.)
- The Dark Ages from 2001-2009: The Internet stock market bifurcated into mega-caps and micro-caps: dozens of dot-com busts gradually liquidated (or turned themselves around), while a few big companies really took off. This eliminated the need for Internet analysts as such; most were merged into larger technology or media teams.
- The Renaissancefrom 2010-????: There’s a compelling IPO filing every month. The micro-caps have either finished liquidating or successfully turned themselves around. Suddenly, without warning, there’s a new Internet ecosystem. And there are new rules: more than ever, companies rely on search engines and social media for their customers; they get customer attention through email marketing and social networks.In short, they conduct their business in public—if you know what to look for.
Now is the right time for Internet-focused equity analysis.
The Digital Due Diligence Edge
- We do not provide the most elegant DCF models.
- We do not have the deepest expert networks.
- We do not offer proprietary information—in fact, we insist on citing our (public) sources at all times.
Here’s what we do have: a unique understanding of the intersection between user behavior and financial outcomes. We’ve designed sites, constructed SEO campaigns, fine-tuned ad-bidding strategies, written up transactional email newsletters, optimized checkout pages—if it leads to incremental users or incremental revenue online, we’ve probably done it, and done it well. (For more, read About Us.)
We work in conjunction with more traditional investment analysis teams. When a major e-commerce player reports a bad quarter, we expect a call from a mutual fund client asking us to explain why it happened. When a hot new content network issues their S-1, we’ll get a call from a hedge fund asking us to take a fine-toothed comb to the prospectus. When a registrar projects high revenue growth, we work with their sell-side analysts to get the real story behind the numbers.
Contact us to find out how we fit into your existing research strategy.
Digital Due Diligence Weekly