Accelerating Netflix subs, Uber profitability among RBC’s top 10 surprise list
RBC Capital analyst Mark Mahaney compiled a broader research note titled “Top Ten Internet Surprises for 2020” list, in which he assigns a “reasonable chance” of 30% or more for the following to occur against the “average internet investor” expectations of the event being improbable.
- 1) Netflix (NFLX) subscriber additions may accelerate because the company will be comping 2019’s “material price increase and a dramatic slowdown in marketing spending.
- 2) Google’s (GOOGL) operating margins may be flat to up as its Google Cloud becomes a smaller margin drag and the company’s Other Bets division gets greater investment after the resignation of its founders.
- 3) Uber (UBER) and Lyft (LYFT) achieve EBITDA profitability thanks “insurance expense leverage, driver and rider subsidies rationalization, pricing actions, and growth leverage”.
- 4) Amazon’s (AMZN) profitability plummets as the company continues its “aggressive investment” in shipping and fulfillment, particularly internationally, while continuing the build-out of AWS salesforce.
- 5) Maturing growth rates and large cash piles may see Google, Facebook (FB), and Booking.com (BKNG) become dividend payers in the internet sector.
- 6) Spotify (SPOT) gross margins may expand as the company concludes its music label negotiations.
RBC Capital Markets is a global investment bank providing services in banking, finance and capital markets to corporations, institutional investors, asset managers and governments globally. Locations span 70 offices in 15 countries across North America, the UK, Europe and the Asia-Pacific region.
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