JPMorgan takes Peloton off its list of top internet stock picks, adds this streaming name

Published Wed, Dec 15 20216:22 AM ESTUpdated Wed, Dec 15 20219:49 AM EST

JPMorgan is out with its 2022 outlook for internet stocks, and the firm swapped one pandemic beneficiary on its top picks list for a streaming name. The firm believes the internet sector stands stronger than it did pre-pandemic but expects more varied stock performance ahead in the new year. "Overall, we expect lower levels of growth as many companies face tough comps and move toward normalization, at the same time as costs ramp back up," JPMorgan's top internet analyst, Doug Anmuth, said in a note Wednesday. JPMorgan is bullish on e-commerce and subscription-based names for 2022. The firm also prefers companies with strong profitability and reasonable valuation. "We believe e-commerce and subscription should see easing comps, growth reacceleration, and an overall more favorable operating environment," Anmuth said. Take a look at the firms' top six internet stock picks for 2022. Peloton Interactive made JPMorgan's most recent iteration of top internet stocks but did not make the list released Wednesday. The stock has struggled as of late, down nearly 64% in the past three months and 74% in 2021. Peloton in November slashed its full-year outlook and froze hiring as momentum for its at-home fitness products slowed. Most recently, a Peloton bike had a negative role in an episode of HBO Max's "Sex and the City" reboot, fueling a sell-off . Peloton then shot back with a parody commercial . While JPMorgan still sees revenue growth ahead for Peloton, the firm cut its price target on the stock to $70 from $90. The new projection is 78% higher than Peloton's closing price Tuesday. New on JPMorgan's list of top internet stocks is subscription-based music streaming platform Spotify . The firm predicts Spotify's user and subscriber growth will reaccelerate in 2022. JPMorgan estimates Spotify will see 67 million additional net monthly active users and 26 million premium subscriber net additions next year. Plus, Spotify's podcast engagement should improve while advertising also ramps up, JPMorgan said. "Gross Margins should increase as SPOT gets beyond heaviest podcast investments & Advertising becomes bigger % of revenue mix," Anmuth said in a separate note. Shares of Spotify have underperformed the market in 2021, down 29% versus the S & P 500's 23% gain. Returning names on the list are Amazon , Facebook parent Meta Platforms , Netflix , Uber and Twitter. — CNBC's Michael Bloom contributed to this report. Correction: Shares of Spotify have underperformed the market in 2021, down 29% versus the S & P 500's 23% gain. An earlier version misstated the year.

A Peloton Interactive Inc. logo on a stationary bike at the company's showroom in Dedham, Massachusetts, U.S., on Wednesday, Feb. 3, 2021.

Adam Glanzman | Bloomberg | Getty Images

JPMorgan is out with its 2022 outlook for internet stocks, and the firm swapped one pandemic beneficiary on its top picks list for a streaming name.