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WEBTOON Entertainment (WBTN): From Digital Comics to Retail Success – A Growth Story

We recently published a list of 10 Best Tech Stocks to Invest In On the Dip. In this article, we are going to take a look at where WEBTOON Entertainment Inc. (NASDAQ:WBTN) stands against other best tech stocks to invest in on the dip.

How’s The Tech Sector Performing in Q3 2024?

Dan Romanoff, a senior equity research analyst at Morningstar provided insights into the current state of the technology sector, on October 1st, 2024. His analysis highlights significant challenges and opportunities for the industry. Romanoff mentioned that after a robust start to 2024, the tech sector experienced a slump in the third quarter. Despite this downturn, software and services companies have continued to report solid quarterly results, even as their stock prices have remained relatively flat. Semiconductor firms, while showing potential for recovery, are currently dragging down overall sector performance.

While discussing the sector-wise ranking of the US stock market based on the Q3 earning season, Romanoff pointed out that the technology sector has been the second-best-performing sector over the past year but ranks as the second-worst performer in the most recent quarter. Romanoff emphasizes that despite these fluctuations, there are positive long-term trends that could benefit the industry. He expressed confidence in several long-term growth drivers within technology, including cloud computing, artificial intelligence, and the expansion of semiconductor demand. He mentioned that these factors are expected to sustain growth in the sector even amidst short-term challenges.

Moreover, according to Romanoff, the Morningstar US Technology Index has risen by 32% over the past twelve months, outperforming the broader US equity market’s 24% gain. He notes that while the median US technology stock is fairly valued with a modest margin of safety, the sector trades at a slight premium on a market-weighted basis. He identifies semiconductors and hardware as being overvalued compared to software, which appears more attractive at present.

READ ALSO: 10 Best Small-Cap Stocks Ready To Explode and 10 Cheap NASDAQ Stocks To Invest In Now

Romanoff also pointed out that generative AI is a significant force within technology. Companies are increasingly integrating next-generation AI capabilities into their products and services. This trend is particularly evident among cloud providers and semiconductor manufacturers. Despite some recent stock pullbacks for Nvidia, Romanoff believes there are still substantial investment opportunities in generative AI beyond just major players. He mentioned that he sees 34% growth in Gen AI Networking equipment spending through 2028. Romanoff also pointed out that the usage of chips and networking gear has grown together from 2022 to 2024 and he expects the trend to continue till 2028.

Our Methodology

To curate the list of the 10 best tech stocks to invest in on the dip, we used the Finviz stock screener and CNN. Using the screener we shortlisted technology stocks that were down at least 25% on a year-t0-date basis, but analysts see a more than 25% upside. Once we had an aggregated list of the tech stocks fitting our criteria, next we cross-checked their analyst upside potential from CNN. Lastly, we ranked these stocks in the ascending order of the analyst upside potential. Please note that the data was collected on November 25, 2024.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Andrey_Popov/Shutterstock.com

WEBTOON Entertainment Inc. (NASDAQ:WBTN)

Share Price: $12.03

Year-To-Date Performance: -47.70%

Analyst Upside Potential: 91.38%

WEBTOON Entertainment Inc. (NASDAQ:WBTN) operates a leading global storytelling platform that connects creators and users through a diverse range of digital content, primarily in the form of web comics and web novels. The platform was launched by Naver Corporation and has grown to host millions of creators and engage a vast audience worldwide.

The company operates in over 150 countries, with a significant portion of its monthly active users coming from outside its primary markets, which include South Korea, Japan, and North America. The platform has more than 24 million creators and is used by around 170 million monthly active users.

On November 15, WEBTOON Entertainment Inc. (NASDAQ:WBTN) announced the launching a new Online Retail WEBTOON Shop for Webcomic merchandise. This will not only help the company increase engagement for its digital platform but will also add a new revenue stream from the direct-to-consumer merchandise market.

In its recent financial report for the third quarter of fiscal 2024, WEBTOON Entertainment Inc. (NASDAQ:WBTN) highlighted several key achievements that reflect its growth and profitability. It reported total revenue of $347.9 million, marking a 9.5% increase compared to the same period last year. This growth was primarily driven by strong performance in Paid Content and Advertising. Moreover, the company also achieved a net income of $20 million, a significant turnaround from previous losses. This improvement was attributed to better gross profit margins, increased interest income from cash assets, and favorable tax benefits.

Overall, WBTN ranks 3rd on our list of best tech stocks to invest in on the dip. While we acknowledge the potential of WBTN to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than WBTN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock

Disclosure: None. This article is originally published at Insider Monkey.

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