With continuing digitization worldwide and advancements in the tech space, experts predict that tech trends will dominate the industry next year. As a corollary to that, as companies across industries invest significantly in tech upgrades, the tech industry should continue to thrive.
According to the J.P. Morgan analyst Doug Anmuth, e-commerce and subscription-based names are preferable to online advertising, given a reacceleration of growth, and "an overall more favorable operating environment." Also, the analyst prefers companies with "strong profitability & reasonable valuation given the rising interest rate environment.”
The investment bank is bullish about Uber Technologies, Inc. (UBER), Spotify Technology S.A. (SPOT), and Twitter, Inc. (TWTR). Therefore, we think these stocks could be good additions to your watchlist.
Uber Technologies, Inc. (UBER)
Popular mobility service provider UBER has more than 900 operations in metropolitan areas worldwide. The company has 93 million active users and completes 1.44 billion rides every quarter.
This month, UBER and Motional, a global driverless technology company, partnered to launch autonomous deliveries for UBER customers, commencing in Santa Monica in early 2022. Through this partnership, Motion should conduct deliveries of a curated set of meal kits from select restaurants on Uber Eats. Also, the partnership is an industry-shaping phase for both companies, and UBER will be able to offer customers convenience and reliability through its innovations.
For the third quarter, ended September 30, 2021, UBER’s revenue increased 72.2% year-over-year to $4.85 billion. The company’s loss from operations decreased 48.7% from the year-ago value to $572 million. Also, its cash and cash equivalents grew 14.8% to $6.48 million for the nine months ended September 30, 2021.
UBER's revenue increased 52.7% year-over-year to $17.01 billion in its fiscal year 2021. The company has an impressive earnings surprise history; it beat the consensus EPS in three of the trailing four quarters. Its EPS is expected to grow 71.8% in the current year. The stock has surged 11.3% in price over the past five trading days.
Spotify Technology S.A. (SPOT)
Based in Luxembourg, SPOT is the world’s biggest music streaming platform with many subscribers. In the third quarter of 2021, SPOT reported 381 million active users worldwide, which indicates an increase of more than 60 million users year-over-year.
In November, SPOT acquired Findaway, a global digital audiobook distributor. This acquisition should accelerate SPOT’s presence in the audiobook space by scaling its audiobook catalog and increasing audience reach and consumers’ experience.
During the third quarter, ended September 30, 2021, SPOT’s revenue increased 26.6% year-over-year to €2.5 billion ($2.82 billion). The company’s gross profit grew 36.6% from the year-ago value to €668 million ($753.58 million). Its operating income came in at €75 million ($84.61 million), versus a €40 million ($45.12 million) operating loss in the third quarter of 2020. Also, the company’s loss per share declined 29.3% from the prior-year quarter to €0.41 ($0.46).
Analysts expect SPOT’s revenue to increase 19.8% year-over-year to $13 billion in its fiscal 2022. Its EPS is estimated to grow 148% next year. The stock has gained 5.1% in price over the past five trading days
Twitter, Inc. (TWTR)
Popular social media platform provider TWTR is a multinational technology company that enables people to connect virtually. TWTR’s daily active users in the U.S. totaled 37 million in the third quarter, and it had more than 397 million monthly active users as of July 2021. The San Francisco company’s innovative edge and brand value have allowed it to enjoy strong growth over the years
During the third quarter, ended September 30, 2021, TWTR’s revenue increased 37.1% year-over-year to $1.28 billion. The company’s interest income was $8.13 million. Its cash and cash equivalents grew 74.7% for the nine months ended September 30, 2021, to $3.47 billion.
TWTR’s revenue is expected to increase 37% year-over-year to $5.09 billion in its fiscal 2021. The company has surpassed the consensus EPS in three of the trailing four quarters. And its EPS is estimated to grow 121.8% in the current year. The stock has gained 2.9% in price over the past five trading days.
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UBER shares were trading at $43.05 per share on Wednesday afternoon, up $1.08 (+2.57%). Year-to-date, UBER has declined -15.59%, versus a 26.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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