What makes a company a "Kingmaker" in digital commerce?

A Kingmaker company owns and controls essential digital platforms or infrastructure that other businesses must use to operate or reach customers. Rather than just selling products, they own the marketplaces, payment systems, or cloud services that other companies depend on. This gives them tremendous leverage and often allows them to collect "tolls" on transactions flowing through their systems.

Why are digital platform companies considered good investments?

Digital platform companies often benefit from strong competitive advantages like network effects (they become more valuable as more people use them) and high switching costs (it's difficult for users to leave). They typically have scalable business models with high profit margins and recurring revenue. As the world becomes increasingly digital, these companies can grow substantially while maintaining their dominant positions.

What are some risks associated with investing in digital platform stocks?

Despite their strong positions, platform companies face risks including regulatory scrutiny and potential antitrust actions due to their market power. They may also face competition from new technologies, changing consumer preferences, or well-funded rivals. Some platforms, particularly in emerging markets, might face geopolitical or currency risks. Additionally, these stocks sometimes trade at premium valuations that expect continued high growth.

What is a "toll-road" business model?

A toll-road business model refers to companies that control critical infrastructure or platforms and can charge fees (or "tolls") on transactions or activities that flow through their systems. Just like a physical toll road collects payments from every vehicle that passes, these digital companies extract value from the economic activity on their platforms. Examples include payment processors taking a percentage of transactions or cloud providers charging for computing resources.

15 handpicked stocks

Kingmakers

These powerful companies control the essential digital arenas that modern business depends on. Carefully selected by our analysts, this collection features firms that don't just participate in digital commerce—they own the platforms where it happens.

Han Tan | Market Analyst

Updated 2 days ago | Published at जून 17