Internet/e-Commerce 1Q Internet Sector Preview Earnings Preview Equity | 06 April 2017 Unauthorized redistribution of this report is prohibited. This report is intended for [email protected] 1Q Preview; Expectations building on a strong 2H Our early sector preview highlights our estimates vs. Street, early 1Q data points, and some opportunities for 1Q results for 30 stocks in our coverage group (more detailed company previews to follow). For large-caps, Street 2017 EPS estimates are down 8% YTD while the average stock price is up 9% YTD; suggesting macro and 2H optimism is driving stocks, which could continue throughout earnings season. 1Q was not without potential pressures, including ramping competition in several sectors and delayed tax refunds. A key theme for the group, in our view, is advertising & listing ranking revenue initiatives at eCommerce sites (AMZN, EBAY, EXPE), and we are constructive on all three stocks. Per our Internet sentiment ranking screen (page 7), FB, WIX, TREE have best sentiment while TWTR and TRIP have weakest. A few early checks positive, mixed eCommerce data Our early ad checks suggest robust overall demand, aided by somewhat easy comps vs 1Q’16, with Instagram momentum a standout. eCommerce is more mixed, with some concerns on consumer spending due to delayed tax refunds, but optimism that spending will rebound in March/April. In travel, there are modest concerns on pressure on US inbound travel, a bigger negative for Expedia than Priceline. FX spot rates for both the Euro and the Pound have depreciated 1% vs. the US$ since end of Jan. Many key upcoming events for stocks in 2Q Top events in 2Q include Facebook’s F8 developer conference on April 18-19, Google’s Marketing Next keynote on 5/23, an AWS event in San Francisco on April 18-19, expected closing Verizon’s acquisition of Yahoo, Netflix’s release of several key franchise including House of Cards, Orange is the New Black, Sense8, Glow, and Unbreakable Kimmy Schmidt, consumer w