Connect with us

BenzingaEditorial

Thursday Wil Be the Crown of Big Tech Earnings Week

Published

on

Amazon Microsoft

Last week set the scene for a momentous Silicon Valley earnings week, with results due from Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOG) and Facebook (NASDAQ:FB). Along with Microsoft (NASDAQ:MSFT) that slashed earnings expectations last week, Goldman Sachs recently noted that these five largest US companies now account for more than one fifth of the value of the S&P 500, up from 16% a year ago.

Facebook

Although initially set to report on Wednesday, Facebook rescheduled its quarterly report to after market close on Thursday. Despite a volatile period everyone is going through, FAANG stock has benefited from people staying home more. But despite increased usage, advertisers aren’t spending as much money to advertise on them.  In its first quarter, revenue grew 17.6% year over year. Between companies cutting their marketing budgets as a result of the downturn and the uncertainty it caused, Facebook did not provide any guidance for the second quarter.  It did provide an update in late April that its April trends reflect weakness across all of its user geographies which has a direct impact on its revenue per user.

The impact of the ad boycott won’t be seen in this quarterly report

Fortunately, large corporations that paused, reduced or stopping their advertising on Facebook in support of the Stop Hate for Profit campaign, which condemns Facebook for not doing enough to stop hate speech on its site started early in July. Therefore, its detrimental impacts will not be reflected in the financials that are being reported this week. Large companies did contribute 25% to its fiscal 2019 revenue so the social media giant is expected to provide somewhat of an update for its investors to “hit the like button”.

Alphabet

In a serious threat to Amazon, Alphabet just announced that it won’t charge third-party retailers a fee for transacting with customers through Google Shopping. Only time will tell, but Alphabet could succeed in stealing some of Amazon’s considerable market share by luring retailers who aren’t fond of these fees cutting into their profit margins. Overall, expectations are not high but the elimination of transaction fees for merchants is a savvy move that could contribute to a positive surprise.

Amazon

Amazon’s shares are up 60% year to date amid bullish sentiment surrounding its strength in ecommerce and cloud technology, two leading sectors that skyrocketed during the pandemic. And considering we’re still far from winning against COVID-19, all signs indicate strong top lines for Amazon. But profits are expected to be much lower than normal, given the heavy spending of $4 billion on its COVID-19 response. Considering that its AWS-dreaded rival Microsoft reported deceleration in its Azure segment last week, AWS could likewise show modestly lower growth due to customers in economically hard-hit industries. Although these factors could offset gains, research shows ad spend up significantly in certain Amazon categories during the pandemic. This highly profitable segment even proved to be the most resilient in during the March quarter.

Meanwhile, Apple’s earnings could tell us a tale of how consumer spending is doing amid the pandemic.  Apple was among the first to report on the impact of the pandemic before it was even labelled as such, warning about supply chain disruptions and its harm to sales. With its global reach and ties to the consumer market, Apple can provide us with great insights on how is the overall market struggling in the new coronavirus world.

The biggest event will be the hearing

We will find out just how insulated were the profits of tech giants from the pandemics. But perhaps what is more important is that their Chief Executive Officers, the so-called captains of the New Gilded Age, will appear together for the first time to testify before Congress on Wednesday to justify their business practices. Via a video conference, they will defend their powerful businesses from the hammer of government. The hearing is the government’s most aggressive move against tech power since the pursuit to break up Microsoft two decades ago. It might be a bizarre spectacle!

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

BenzingaEditorial

Snap Makes a Comeback

Published

on

Stock Market Tumble

Snap Inc (NYSE: SNAP) stock soared to a record high as the social media company smashed revenue estimates along with massive earnings beat. Shares were up more than 20% in after-hours trading. Snap’s earnings surprise fueled the stock of its social media peers. In after hours trading, Facebook (NASDAQ: FB) gained 3%, Twitter (NASDAQ: TWTR) jumped even more at 4.6% and Pinterest (NYSE: PINS) skyrocketed 5.8%. Prior to the earnings report, Snap stock skyrocketed more than 70% this year with investors sending its stock price up as much as 37% on Wednesday and lifting its market capitalization as high as $57 billion.

Q3 key figures

The Los Angeles-based delivered $679 million in revenue, smashing past Wall Street expectations at $555 million.Revenue jumped 52% YoY compared to the same period last year when, showcasing a huge comeback for the company which has faced some difficult quarters since making their debut.

The social media company unexpectedly reported an adjusted profit of 1 cent per share, topping Wall Street’s estimate of an adjusted loss of 5 cents. Snap reported daily active users of 249 million, up 18% from the year-ago period, exceeding its projections in the range of 242 million to 244 million as well as analysts’ estimates of 243 million. Net loss fell approximately 12%, from last year’s $227 million to $200 million.

Snap reported its daily active users at 249 million which marks approximately a 4% increase from the 238 million it reported in July and 19% up compared to the 210 million from the same quarter one year ago.

Capitalizing on Facebook’s ad boycott

The social media company used the third quarter as an opportunity to interact with brands that were looking to align their marketing efforts with platforms who share their corporate values. In other words, Snap took advantage of StopHateForProfit Facebook ad boycott, under which more than 1,000 advertisers paused their ads on the platform back in July. Although Facebook’s inaction to contain and fight hate speech and misinformation didn’t have any severe consequences on the giant as some brands already returned, Snap used this opportunity to interact with advertisers to show the value of its offering and future prospects.

Q4 forecasts

Snap expects YoY revenue growth in the range between 47% to 50% for the fourth quarter. It expects 257 million DAUs but also an increase in expenses.

Outlook

While uncertainty has become a new normal when it comes to the global macroeconomy, Snap is pleased with what it achieved and remains highly optimistic about its long term prospects. The adoption of augmented reality is happening faster than the company previously anticipated, and it is working hard to capitalize on this opportunity. Delivering unexpected, adjusted profit along with positive user and revenue growth in its third-quarter earnings shows Snap is headed in the right direction.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

Continue Reading

BenzingaEditorial

Tesla Has Both Another Profitable Quarter and Record Up Its Sleeve

Published

on

EV Stock Market

On Wednesday, Tesla (NASDAQ: TSLA) continued its meteoric rise as it delivered its fifth straight quarterly profit. Tesla has also set a revenue record, triggered by a boost in vehicle deliveries as well as sales of pollution credits to other automakers.

Key Q3 figures

Revenue rose 30% year-on-year, from $6.30 billion the same period last year to a record $8.77 billion. Analysts had expected revenue of $8.36 billion, according to Refinitiv. But Tesla would not have achieved a profitable quarter without sales of regulatory credits which amounted to $397 million. In fact, this is the fourth consecutive quarter that Tesla would not have been profitable without this revenue source that makes up 7% of total automotive revenue.

Net income was $331 million, which was more than triple its second quarter earnings which were impacted by the temporary plant shutdown due to the pandemic. Excluding items, profit amounted to 76 cents per share. Operating income also expanded to $809 million, improving operating margins to 9.2%.

Tesla is no longer starving for cash as it ended the quarter with $14.5 billion in cash on hand, marking a 69% increase in just three months.

Competition

Musk announced Cybertruck orders will be delivered in 2022 or the end of next year at earlierst. But on the same day, General Motors (NYSE: GM) revealed an electric version of its Hummer pickup truck is set to challenge Tesla’s futuristic Cybertruck. Back in September, Ford Motor (NYSE: F) also announced that it would be slashing the price on its Mustang Mach E to increase its competitiveness.

As more competitors enter the race, environmental regulatory credit will dry up as a source of revenue for Tesla. It has been a meaningful source of revenue for more than a year now.

Tech improvements

Back in September, Musk unveiled a sweeping new vision for Tesla’s battery manufacturing plans and a road map to achieving an affordable EV. Not to mention the ambitious plan to deliver up to 40% more EVs than last year. On Wednesday, the focus on improving manufacturing cost, efficiency and capacity as quickly as possible was evident. But Musk said the company won’t count on its own cell production before 2022, so it will continue relying on Panasonic Corporation (OTC: PCRFY) and other external partners for battery supplies. But its Berlin factory will begin production as early as next year while also building  its biggest battery and vehicle factory yet in Austin, Texas, and at great speed.

Solar improvements

While the automotive business is still the star of the show, Tesla’s solar and storage businesses showed significant improvements during the quarter. Musk continues to believe that Tesla’s energy business will ultimately be as large and successful as its EV business. Companies like Ideanomics (NASDAQ:IDEX) which announced today to invest in E-tractor company Solectrac show that Solar and EV are an interesting match.

Outlook

The target to deliver half a million vehicles by the end of this unprecedented year is still on. This implies Tesla will have to significantly ramp up its sales in the undergoing quarter. With a market cap exceeding $394 billion, Tesla already became the largest global automaker, despite lagging its competitors in key financial figures, namely sales, revenue and profit. But unlike its automotive peers, Tesla has defied the pandemic-induced downturn that drowned the whole auto industry as it surfed its way through the pandemic, with its shares gaining 400% this year. By the looks of it, Tesla has sufficient liquidity to fund Musk’s roadmap and long-term ambitions.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

Continue Reading

BenzingaEditorial

Regulators Pose a Bigger Threat to Comms Than COVID-19

Published

on

Global economy corona virus

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Twitter (NYSE: TWTR) and Facebook (NASDAQ: FB) have changed our everyday life for good. Besides its enormous ecosystem, Alphabet’s Google is indisputably the most popular search engine across the globe.  Twitter’s platform has become a soapbox for politicians, celebrities, and journalists. With their tweets, it became the source of real-time news. Facebook dominates generalized social media in the U.S. but it has not unseated Twitter in the microblogging universe. All three have dealt with positives in engagement and negatives in reduced ad spending during the pandemic. But the bottom line is each of these stocks have been pandemic-resilient.

Facebook

With a market cap of $700 billion, Facebook remains the 800-pound gorilla that is several multiples larger than Twitter, Pinterest (NYSE: PINS), and Snap (NYSE: SNAP) combined. Its umbrella of sites host 2.7 billion monthly active users, with 1.79 billion of them engaging daily. To further growth, Facebook gained a first mover advantage in VR. The 40% year-over-year increase in non-ad revenue in the second quarter confirms Facebook has capitalized on this lead. Facebook just announced its Messenger API has also been updated to allow businesses to manage their communications across Instagram, in addition to Messenger. Businesses using the API can also manage their Instagram presence, including their Profile, Shops and Stories, proving Facebook has also done a good job in catching the e-commerce wave.

Alphabet

Alphabet’s stock has risen nearly 30% over the past 12 months. Alphabet’s revenue rose 18% to $161.9 billion last year. Google’s ad revenue expanded 16% with non-ad revenue increasing by 21% but the ultimate winner being Google Cloud’s revenue that skyrocketed 53%. But during the first half of the year, that image was significantly altered. Alphabet’s revenue rose merely 6% year-over-year as it amounted to $79.5 billion. Google’s ad revenue grew less than 1% as ad spending was hampered by the pandemic. But, Google Cloud’s revenue surged 47% and even Google’s non-ad revenue expanded 24%.

Wall Street expects Alphabet’s revenue to rise 7% this year with a decline of 10% in earnings. But analysts also expect its revenue and earnings to rise 21% and 28% next year, under the assumption of a rebound in ad spending and the end of the pandemic. But Google’s antitrust challenges across the world remain, and they could significantly limit its ability to expand its ecosystems.

Twitter

Over the past 12 months, Twitter’s stock rose approximately 15%. Twitter generated 83% of its revenue from online ads in the first half of 2020, with the rest being generated by its “data licensing and other” business. But despite its popularity, Twitter has faced growth struggles as it must compete with Facebook, comparing to which is tiny in terms of market cap with its $31 billion.

Twitter’s business model was quite exposed to the pandemic. Revenue shrank 19% compared to the same quarter last year, leading to a quarterly loss of $1.56 per diluted share. It’s quite a difference compared to $1.43 per share it earned one year ago.

Revenue rose 14% to $3.46 billion last year, with advertising revenue rising 14% due to demand in the U.S. and its data licensing and other revenue also rising 10%. But 2020 brought an entirely different picture. During the first half of the year, revenue fell 8% YoY to $1.49 billion. Ad revenue dropped 12% as corporations needed to cut on ad spending. The drop has offset the 11% growth of its data licensing and other business segment. The operating margin turned negative and resulted in a net loss of $1.39 billion which is quite different from last year’s profit of $1.31 billion for the same period.

Analysts expect Twitter’s revenue to decline 5% this year and its earnings to stay in the red. But if the pandemic ends next year, revenue is expected to rebound 24% with a full-year profit. The slowdown could be short-lived but as the upcoming U.S. election could also bring more users to Twitter, despite the fact the platform banned political ads.

Outlook – the regulatory barrier

Facebook, Alphabet, and Twitter once again find themselves on the target of regulators. They seem to find themselves in the crosshairs of regulators, both in the U.S. and abroad, over and over again. They are constantly being criticized regarding antitrust and privacy issues. Although Big Tech has already proven its mighty power, hefty fines and new protocols could be costly and, consequently, erode profit margins. More importantly, being closely watched upon can hamper their growth prospects.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

Continue Reading
Advertisement

Submit an Article

Send us your details and the subject of your article and an IAM editor will be in touch with you shortly

Trending