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Wednesday's release of Piper Sandler's semi-annual Teen Survey revealed significant insights into digital engagement trends among teenagers, particularly in areas of customer service, marketing, authentication, social media, and streaming. The survey, which tracks the behavior and preferences of teens, noted a substantial increase in the use of voice as a customer service channel, with a year-over-year rise to 51% of mentions, signaling a potential boost for Contact Center as a Service (CCaaS) vendors.
In marketing communications, there was a slight uptick in campaigns run through SMS and email, which could be favorable for companies like Twilio (NYSE:TWLO) and Bandwidth (NASDAQ:BAND). The survey also found that SMS messaging continues to be the central method for teens' authentication processes, maintaining a consistent mix compared to previous surveys.
A record-breaking average of 4.9 hours per day spent by teens on social media platforms was reported, marking a significant year-over-year increase. This trend, particularly the growing dominance of TikTok, could drive positive usage for content delivery networks (CDNs) such as Akamai Technologies (NASDAQ:AKAM) and Fastly (NYSE:FSLY). According to InvestingPro data, Akamai maintains strong profitability with a 59.4% gross margin and appears undervalued based on its Fair Value analysis.
While gaming trends remain weak, there was an uptick in streaming across all apps, which could benefit the same CDNs. The survey also highlighted that online shopping habits have remained consistent, with 20% of teen shopping conducted online, suggesting a neutral impact on CDNs like Akamai, Fastly, and Cloudflare (NYSE:NET).
The survey data indicated that Akamai, Fastly, Amazon (NASDAQ:AMZN), and Cloudflare are the main CDNs facilitating traffic to the top e-commerce sites frequented by teens. The gaming sector, however, showed flat engagement compared to the previous survey, with full-game downloads decreasing slightly, which could be a near-term negative for Akamai given its significant exposure to the gaming industry. Despite these challenges, InvestingPro analysis shows Akamai maintains robust financials with $996 million in levered free cash flow over the last twelve months. The company's stock is currently trading near its 52-week low, potentially presenting an opportunity for investors interested in the CDN sector.
The anticipated release of the Nintendo Switch (NYSE:SWCH) 2 and new gaming content in 2025 is expected to be positive for the sector throughout the year. Additionally, the survey found that teens are increasingly utilizing streaming services, with 96% of viewing occurring via streaming rather than cable. This shift, along with an increase in streaming time to 2.6 hours, is slightly positive for CDNs like Akamai and Fastly.
In summary, the survey suggests a mixed to positive outlook for CCaaS vendors, while companies such as Twilio, Bandwidth, Akamai, and Fastly may see benefits from the trends identified in teen digital engagement and consumption patterns. For deeper insights into Akamai's financial health and market position, including 12 additional ProTips and comprehensive valuation metrics, visit InvestingPro, where you'll find detailed analysis in our exclusive Pro Research Report, part of our coverage of over 1,400 US stocks.
In other recent news, Akamai Technologies has been actively expanding its offerings and partnerships. The company unveiled its App & API Protector Hybrid, a new cybersecurity solution designed to enhance web application firewall capabilities across diverse environments. Akamai also announced a multi-year agreement to provide hosting and infrastructure services for kernel.org, supporting Linux kernel development and reinforcing its commitment to the open-source community. Additionally, Akamai introduced Akamai Cloud Inference, a service aimed at improving AI application efficiency by utilizing its globally distributed cloud platform. This service is expected to enhance the performance of predictive models while reducing costs.
Moreover, Akamai launched its Cloud Accelerated Compute Instances, incorporating NETINT's video processing units (VPUs) to deliver more efficient media transcoding solutions. This move positions Akamai as the first cloud provider to integrate VPUs, potentially reducing operational costs for high-quality video streaming. In terms of financial outlook, Oppenheimer has issued an Outperform rating for Akamai, setting a price target of $100. The firm cites confidence in Akamai's growth potential, particularly in its Security and Compute portfolio, despite industry challenges. These developments reflect Akamai's ongoing efforts to innovate and strengthen its market position.
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