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Sector Valuations Internet sector trading multiples for EV/EBITDA and P/E are tracking up slightly YTD, (excluding NFLX). Ona y/y basis, the group P/E is at 24x vs. 22x last year, while the group EV/EBITDA is at 14x vs. 13x a year ago. Chart 3: Internet Sector Historical 2-Yr Forward Avg. EV/EBITDA Chart 4: Internet Sector Historical 2-Yr Forward Avg. P/E 25x 40x 35x 20x 30x 45x 29X 20x 10x 15x 10x 5x 5x Ox Ox Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Source: BofA Merrill Lynch Global Research, Bloomberg, as of 4/4/2017 Source: BofA Merrill Lynch Global Research, Bloomberg, as of 4/4/2017 Large cap receiving a premium; Small caps at the low-end of historical range Excluding NFLX and YHOO, large cap stocks in the Internet group are trading at 26x 2018 EPS below the small cap group at 28x 2018 EPS, with both Large and Small caps trading slightly above their average for the past 5 years (see chart below). The media sector is trading at a steep discount to travel and eCommerce. e The eCommerce sector is currently trading slightly above the midpoint of its five year range at 32x 2018 EPS. AMZN and WIX are well above at 49.5x and 74x respectively while EBAY is trading below at 15x. e The Media sector is trading well below the midpoint of its recent range (excluding NFLX)}, at 25x 2018 EPS. GOOG (18x), FB (21x}, and YELP (23x) are below the sector average while TWTR (40x) is above. e The Online Travel sector is currently trading slightly above the mid-point of its five year range at 23x but below the internet sector average. TRIP (29x) is trading above the average while EXPE (18x} and PCLN (21x) are below. Chart 5: Historical 2-Year Forward P/E Multiple By Sector (ex NFLX) Chart 6: Historical 2-Year Forward P/E Multiple (select stocks) 70x 90.0x 60x 80.0x Boy 70.0x 40 60.0x * 50.0x 30x 40.0x 20x 30.0x 10x 20.0x ox 10.0x Ss Sf SK YP LW LS 0.0% g S & s 3 sc s x ec « Se fs &€ © & FC S ¢ B es 4 s VF FE TKS VCS L Source: BofA Merrill Lynch Global Research, Bloomberg, as of 4/4/2017 Source: BofA Merrill Lynch Global Research, Bloomberg, as of 4/4/2017 6 Internet/e-Commerce | 06 April 2017 Bankof America Merrill Lynch HOUSE_OVERSIGHT_014892