Position Monitor Changes
As a reminder, we express ideas using a long/short portfolio (often neutral) framework where the goal is to have our longs outperform shorts over an intended duration. Any single idea (and ranking) may be a function of another and/or used to hedge (both sides) a certain fundamental, thematic, macro, or policy risk. We constantly evaluate our ideas and conviction based on incoming data / new information, rate of change, proximity to a catalyst, and estimate revision trends.
- We are moving Alphabet (GOOGL) to an active long from the long bench. We covered the GOOGL short on 3/3 (Click Here for Note) and moved GOOGL to the long bench during our April #Wrap Call on 4/24. We are moving GOOGL to an active long as the data we track for direct response advertising campaigns continue to show improvement from March/April as we enter a seasonally stronger period into May. For GOOGL specifically, we begin to compare against last year's efficiency declines (i.e., lower site traffic growth), and agency feedback (see April Wrap Call) has turned cautiously optimistic. We also have started to hear more constructive feedback on Google's Performance Max - specifically, advertisers are starting to see modest improvements in performance now that we are further into the adoption/launch and models have had time to train. Google plans to roll out new AI tools to advertisers later in 2023 (e.g., A/B testing support, creative/copy writing, optimizing shopping feeds) that will also yield efficiency improvements. Lastly, we no longer see downside to consensus EPS estimates for 2023/2024 (we are in-line) and expect revenue growth will accelerate 2H23 (easier comps / intl improvement supported partly by fx through Q3, followed by a pickup in the domestic advertising business in Q4). As always, we will remain data dependent.
