We’ve put together a list of the best software stocks to consider, and today, we’re taking a closer look at WEBTOON Entertainment Inc. (NASDAQ: WBTN). This company is making waves in the software industry, especially in the realm of digital storytelling.
According to recent reports, software company valuations have soared, largely driven by the rise of artificial intelligence (AI). Companies that effectively integrate advanced AI into their services are drawing significant investor interest. The current market sees software companies trading at about 6.2 times the median projected revenue.
One reason for this surge in valuations is the rapid adoption of Generative AI (GenAI). In fact, the use of GenAI in businesses nearly doubled from the previous year, with around 65% of companies now utilizing it. Many organizations have moved from testing phases to fully implementing GenAI, which is improving operations and enhancing customer experiences. Funding for GenAI-related software also jumped dramatically in 2024, reaching about $56 billion, with major contributions from companies like DataBricks and OpenAI.
Jeff Richards, a managing partner at Notable Capital, recently discussed the positive impact of AI on the software sector during a CNBC interview. He emphasized that AI is no longer just a theory; it’s being actively used across numerous applications. The journey of AI began with hardware, progressed to data centers, and is now influencing software development. Venture capitalists have been pouring money into software startups to harness the power of GenAI effectively.
Next, we looked into how we compiled our list of top software stocks. We used the Finviz stock screener with a focus on stocks that analysts believe have an upside potential of over 50%. We double-checked these findings using CNN and ranked the stocks accordingly. We also noted how many hedge funds are investing in each company.
Now, onto WEBTOON Entertainment Inc. This digital platform allows users to discover and share web comics and novels. With a presence in over 150 countries and 170 million active users, it has tapped into a vast audience, especially in Korea, Japan, and North America. Recent efforts to engage users include launching the WEBTOON Shop for merchandise, which should open up new revenue opportunities.
In its fiscal third quarter of 2024, WEBTOON reported a revenue of $347.9 million, a growth of 9.5% year-over-year. This increase came mainly from more users opting for paid content and advertising on the platform.
Overall, WEBTOON ranks 6th among the top software stocks according to analyst recommendations. While it shows promise, we’ve observed that AI stocks may provide even higher returns in less time. For those interested in AI-related investments, there are options available that trade at attractive valuations.
In summary, WEBTOON is a notable player in the software market, especially with its innovative platform for storytelling and strong financial growth.
For more insights, you might want to check out some of the top AI stocks to consider or find lists of AI companies with significant growth potential.
Disclosure: None. This article was originally published on Insider Monkey.
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Jeff Richards, GenAI, software companies, software stocks, revenue streams, Finviz stock screener, software company, hedge funds, funding software, revenue stream, WBTN, WEBTOON
