Cars.com lags peers as DoorDash and Sea show earnings strength

Consumer internet stocks have underperformed the broader market over the past six months, with the sector falling 3.1% while the S&P 500 returned 8.1%. Investors attribute this divergence to weakening consumer spending habits, a factor that heavily influences demand for digital services. Despite these headwinds, specific companies within the sector continue to demonstrate distinct financial trajectories, leading analysts to differentiate between those poised for sustainable growth and those facing structural challenges.

Cars.com (NYSE:CARS), a digital marketplace for new and used vehicles with a market cap of $550.9 million, presents a cautionary case. Originally launched as a joint venture involving The Washington Post and The New York Times, the company has struggled to maintain its dealer customer base over the last two years amid increasing competition. Wall Street estimates suggest tepid growth of 1.4% in demand over the next 12 months. Furthermore, earnings per share have declined by 15.6% annually over the past three years, a trend that threatens long-term stock price performance. At $10.28 per share, Cars.com trades at a forward EV/EBITDA multiple of 4.7x.

In contrast, DoorDash (NASDAQ:DASH) and Sea (NYSE:SE) exhibit metrics that support stronger investment theses. DoorDash, an on-demand food delivery platform founded by Stanford students with a market cap of $79.92 billion, has grown its order volume by 23.5% annually. This growth supports profitable cross-selling opportunities and is underpinned by an efficient business model that achieved a 20% EBITDA margin. Over the past three years, DoorDash’s annual earnings per share growth of 98.3% significantly outpaced its revenue gains, indicating that incremental sales were highly profitable. The stock is priced at $184.86, implying a forward EV/EBITDA multiple of 19.1x.

Sea, which began as a gaming platform in 2009 and expanded into e-commerce and financial services across Southeast Asia, holds a market cap of $47.74 billion. The company’s paying user base is rising, allowing for revenue expansion without proportional increases in customer acquisition costs if cross-selling efforts succeed. Over the last two years, Sea increased its average revenue per user by 15.5% annually while growing engagement, demonstrating significant switching costs within its platform. Earnings growth has also outpaced peers, with EPS compounding at 25.8% annually over the past three years. Sea trades at $78.06 per share, representing a forward price-to-gross profit multiple of 3.3x.