Internet tech stocks and related exchange traded funds could surprise in the new year as a number of prominent names change it up.
Any changes in the large internet tech names could affect sub-sector ETFs, like the PowerShares NASDAQ Internet Portfolio (NasdaqGS: PNQI) and First Trust Dow Jones Internet Index Fund (NYSEArca: FDN). PNQI is down 0.3% year-to-date while FDN is up 4.3%.
RBC Capital Markets’ internet analyst Mark Mahaney believes in the market is in for a number of surprises “which the average internet investor thinks is highly improbably, but we believe has a reasonable chance of occurring,” reports Tiernan Ray for Barron’s.
For instance, Google (NasdaqGS: GOOG) could perhaps begin returning cash to shareholders, Mahaney suggested. The company is projected to have $80 billion in cash, near the $100 billion level where Apple (NasdaqGS: AAPL) started to dish out dividends.
Mahaney also believes that Facebook (NasdaqGS: FB) could increase costs to 70%, arguing that “given the company’s long-term investment orientation,” perhaps the market shouldn’t be so dismissive of the 70% scenario.”
Amazon (NasdaqGS: AMZN) could “actually start to recover,” Mahaney added, pointing to multiple factors like expanding into consumer pakcaged good sales, which may be “met with material appreciation in Amazon Shares.” AMZN is currently sitting in a bear market, falling off 22.5% year-to-date.
Consumers are increasingly turning to online avenues to cover their shopping needs, potentially supporting e-commerce companies. As the U.S. economy expands, employment rate improves and gasoline prices remain depressed, U.S. consumers will likely increase spending. [Rising eCommerce Bolsters Internet ETFs]