Investing.com -- First-quarter results for internet companies are expected to shed light on how the sector is managing through macroeconomic headwinds and tariff-related uncertainty, Jefferies analysts said Wednesday.
While broad sentiment toward consumer internet remains cautious, the analysts suggest the Q1 season could act as a “positive catalyst” if expectations for fiscal year 2025 (FY25) “remain relatively intact.”
Against this backdrop, Jefferies highlights four stocks—Uber Technologies Inc (NYSE:UBER), DoorDash (NASDAQ:DASH), Zillow (NASDAQ:ZG), and Reddit (NYSE:RDDT)—as their top picks for the quarter.
Uber Technologies is seen as one of the best-positioned names in the group. The brokerage cites “another strong Mobility print and greater disclosure on Waymo partnerships” as potential drivers for upside.
It also believes the company is “especially well-insulated to a potential downturn due to the diversification of its business” and strong exposure to affluent consumers.
For DoorDash, the analysts see a bullish case for $3 billion in 2025 EBITDA. Jefferies expects a beat-and-raise quarter, helped by upside in gross transaction volume (GTV) and margin expansion despite temporary headwinds.
“We believe DASH is relatively well insulated to a potential recession due to the business’s exposure to relatively affluent consumers, defensive categories (restaurant and grocery), and improved gig worker supply,” analyst John Colantuoni said in the note.
Zillow, meanwhile, is projected to post a fourteenth straight revenue and EBITDA beat, with Jefferies pointing to a modestly stronger housing market.
The brokerage will also look for signs of whether Zillow’s Real Time Touring product is driving further outperformance for its Premier Agent solution.
Lastly, Reddit also earns a place among Jefferies’ top ideas. Colantuoni highlights “strong ad checks and low expectations” setting up a favorable risk-reward profile into the print. The analyst is looking for net additions of 2-3 million U.S. daily active users (DAUs) sequentially.
“We will focus on user growth as a proxy for RDDT’s long-term opportunity if near-term macro headwinds obfuscate the outlook. We will specifically look for evidence of a recovery in 1Q traffic following disruptions from Google (NASDAQ:GOOGL) algorithm changes in late 4Q,” the note states.
A return to 2-3 million quarter-over-quarter growth in U.S. DAUs would help reinforce confidence in the long-term story.