JPMorgan Survey: Meta is the Favorite Internet Stock for 2023

According to a JPMorgan survey of investors, Meta Platforms Inc. is expected to be the top-performing megacap internet stock this year. This suggests a rebound for the Facebook parent after its worst year on record.

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The survey found that 41% of respondents named Meta as the company they expect will perform the best this year, followed by Amazon.com Inc. at 36%. E-commerce is expected to be the best-performing subsector, while streaming-video company Netflix Inc. is expected to be the worst-performing megacap.
Meta's stock is up 0.7% as of 10:10 a.m. New York time Tuesday, while Amazon and Netflix have gained 1.8% and 1.5%, respectively.

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All three companies have seen significant declines; Meta fell by 64% in 2022, making it one of the 10 worst performers on the S&P 500 Index, which itself fell by 19%. Amazon saw a 50% drop, its biggest one-year decline since 2000, while Netflix fell by 51%. However, Netflix is up nearly 90% from its June low.

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The group saw widespread pressure as the Federal Reserve aggressively raised interest rates to combat inflation, weighing on the multiples of so-called growth companies, while also raising the prospect of a recession. Meta saw outsized weakness as it struggled with a changed privacy policy at Apple Inc., which diminished its ability to sell targeted ads on iPhones. Investors also questioned Meta's controversial plan to invest heavily in the metaverse.

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According to a survey conducted by JPMorgan analyst Doug Anmuth, 43% of respondents expect market-cap weighted internet stocks to outperform the S&P 500 by more than 5% this year. This is compared to 30% of respondents who expect the S&P 500 to be up by more than 5% in 2023.

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According to the JPMorgan survey, investors see three primary tailwinds for the internet sector, including attractive valuations, easing year-over-year comparisons, and improved cash flows and margins. The respondents cited macroeconomic concerns as the biggest expected headwinds, along with a deceleration in revenue and growth.

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The survey indicates that investors expect Match Group Inc., the parent company of dating app Tinder, to be the best-performing mid-cap internet stock this year, and for apparel retailer Farfetch Ltd. to be the top small-cap. Twenty-four percent of respondents named Farfetch, which JPMorgan wrote was "higher than we expected."