Internet investors remain largely focused on shorter-term trends, near-term growth comps and macro influences, rather than secular growth drivers, heading into 2022, Baird analyst Colin Sebastian tells investors in a research note. The analyst assumes that near-term sentiment will be driven more by forward-year growth comps and margin trends, and less by the size of total addressable markets or secular growth themes. With this in mind, he’s transitioned his large-cap pick from Alphabet (GOOGL) to Amazon.com (AMZN) and Meta (FB). Sebastian’s also changed his top small/mid-cap picks from ChannelAdvisor (ECOM), Carvana (CVNA) and Take-Two Interactive (TTWO) to Zynga (ZNGA). In addition, the analyst is “warming to a few others,” including Twitter (TWTR) and Vroom (VRM.) For Meta, Sebastian expects more positive commentary related to core advertising trends in 2022. On Amazon, he says the company is a key beneficiary of digital transformation and a mix shift towards recurring revenues. For Zynga, Sebastian sees potential positive catalysts from easing Identifier for Advertisers headwinds and ramping monetization of new titles.
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