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COVID-19 Was Powerless Against FAANG Stocks- But There Are More Battles to Be Won!

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Facebook Earnings News

FAANG is an acronym that stands for the five most popular and best-performing US technology stocks in the market. They are Facebook Inc (NASDAQ:FB), Amazon.com Inc (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX) and Alphabet’s Google (NASDAQ:GOOG). Well, Facebook, Amazon and Netflix hit record highs recently but this doesn’t mean all is bright.

Alphabet Trails Behind Facebook. But Despite Hitting Highs- Controversies Remain.

Facebook’s stock (NASDAQ:FB)  is up by about 16% since early 2018 which is below 28% gain for Google’s parent Alphabet’s stock (NASDAQ: GOOGL) over the same period. Facebook’s revenues have expanded 74% between 2017 and 2019. This is 1.6x those of Google in the same period. Facebook’s higher revenue growth over recent years and its higher multiple imply higher potential earnings growth in the future. The hype is led by its big push into e-commerce with the launch of Shops.  And it took Shopify Inc (NYSE:SHOP) for the ride as well, which became Canada’s most valuable company. But controversies remain at Facebook’s side as Zuckerberg recently refused to act against President Trump’s posts.

Alphabet’s Potential Could Be Stronger Than We Realize

It can be argued that the company has a higher quality revenue mix, especially due to its highest-growing segment, Google’s Cloud business that gives more resilience to Google’s revenues. Google has very large advertising exposure but unlike Facebook that earns 98% of revenues from it, ads contribute 80% to Google’s revenues. So Google’s pay per click advertising, for which marketers only pay when their ads get results, could hold up stronger than anticipated. While many of Google’s offerings don’t make much money yet, they could imply that Google is being undervalued.

Amazon Stock May Have Soared With Restarted Non-Essential Deliveries But Its Biggest Weakness Remained

The company is at a crossroads as it is facing sharp criticism over its treatment of employees – and the way the company responds to the objections may well determine its future.

The e-commerce giant made it easier for employees to juggle day care amid the COVID-19 pandemic. It announced ten days of subsidized emergency backup child or adult care. By covering more more than 90% of the cost of care, the e-commerce giant will invest several million dollars to offer this benefit during the next few months. What we don’t know is if the spending is part of the $4 billion Amazon took aside for its COVID-19 response during the current quarter.

But it is unclear whether the importance the company now seems to be placing on its employees is just a forced response to the criticism or if it truly reflects its commitment to the wellbeing of frontline employees. After all, the company was known for its poor working conditions long before the pandemic.

You could think that Amazon performed well anyway but workforce management also matters to investors. In last week’s shareholder meeting, they showed concern for the company’s reputation to be permanently damaged by this increased scrutiny. Bezos is being pressured to improve the treatment of Amazon’s workforce.

Apple

Shares of Apple have been on a good track for a while. Investors have applauded the company’s shift from a business model that is dependent on hardware revenue to a more services-based structure. As a reward, its stock went up 80% over the past year. Since surpassing a $1 trillion market cap in 2019, shares of Apple have continued to climb sharply. The company’s value has come near $1.4 trillion. Further robust growth in Apple’s services and wearables businesses and strong operational tailwinds over the next for years will help the tech company go forward. But with sales of the iPhone having hit a saturation point, which is why Apple has only grown its revenue by a total of 20% over the last three years, the switch or innovation is a must.

Netflix Achieved Record Figures but Analyst Fear Collapse

Despite short term headwinds, Netflix gathered a fast-growing member base of 182.86 million. It blew away expectations by adding 15.77 million new subscribers in the first quarter. But sceptics are not a fan of its high cash burn as Netflix is heavily spending on content. It burned more than $3.2 billion in cash last year. Also, whether Netflix will continue to be able to raise prices to offset its rising costs in light of this increased competition.

Outlook

The overall performance of the FAANG stocks is optimistic for the global economic recovery. No one seems to be afraid of holding any of FAANG stocks right now. But that doesn’t mean each doesn’t have its own concern.

The most ‘threatened’ seems to be Amazon. Amazon should direct all its resourcefulness and superior operational capabilities towards employees.  Bezos must see Amazon’s workforce as an energizing wheel that propels the company’s productivity and not as a hit to the bottom line. In other words, Amazon must give the same attention to its employees as it did to its customers.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic 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 Questions about this release can be send to ivana@iamnewswire.com

BenzingaEditorial

FedEx Is Struggling To Shake off the Pandemic-Domino Effect

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On Tuesday, parcel delivery company FedEx Corporation (NYSE: FDX) reported a decline in quarterly profit along with cutting its earnings outlook due to higher costs and labor shortages. Upon the news, its shares declined more than 4% in after-hours trading.

Figures

For the quarter that ended in August, revenue rose 14% to $22 billion which was in line with Refinitiv survey of Wall Street analysts. But net income slid to $1.1 billion, or $4.09 a share, below FactSet expectations of $4.88. During the same quarter last year, it earned $1.25 billion, or $4.72 a share, translating to an 11% drop in profit. Excluding restructuring and integration expenses, per-share earnings become $4.37. The tight labor market increased spending to by $450 million as FedEx needed to pay more overtime and raise spending to attract workers while it also needed to spend more on transportation. Salaries and employee benefit expenses alone rose 13%, including 27% in its Ground division. Moreover, shipping demand unexpectedly slowed due to supply-chain disruptions as the current labor environment is driving operational inefficiencies that are dragging down financial results.

Outlook

Tennessee-based delivery giant expects FedEx further downgraded its per-share earnings forecast that it issued in July. Per share earnings before certain accounting adjustments for the fiscal year that started in June are expected to be in between $18.25 and $19.50

Failed attempt to offset higher costs

Like United Parcel Service, Inc (NYSE: UPS), FedEx raised prices and imposed surcharges to offset higher costs associated with the surge in demand as the volume of commercial ground and express packages rose. However, supply chain disruptions slowed domestic parcel demand in the US compared to last year.

On Monday, FedEx announced it will raise its rates 5.9% on average at the beginning of 2022. This is the highest annual increase both FedEx and United Parcel Services Inc. have implemented over the last eight years. But both shipping companies instituted new fees and raised rates on customers as the environment has provided them with increased pricing power.

FedEx’s struggles aren’t going away

According to its Chief Operating Officer Raj Subramaniam, the consequences of a constrained labor marketscontinues to weigh heavily on operations and consequently, financial performance. In an effort to catch up, the company is diverting 25% of the volume bound for its troubled Portland hub to other locations, adding trucking routes and hiring assistance from third-party transportation companies. About 600,000 of its packages a day are being rerouted in attempt to address these network bottlenecks.

The problem is that disruptions are hampering the entire supply chain, from factories starving for parts to congested ports and railroads. Online sales are also taking as consumers shop in store or pick up their orders themselves.

UPS is ahead

On one hand, FedEx picked up some business from UPS as the company was cutting ties with some customers to focus on more profitable business. On the other, it lost customers such as Clean Eatz Kitchen Inc. due to delays that costed the company thousands of dollars worth of shipments of ready-to-eat frozen meals that ended up spoiled. Recently, the company shifted all its business to UPS, saying that on-time delivery rates are in the high 90s after it made the switch.

Even more challenges ahead

FedEx is facing these challenges only weeks before the busiest time of the year for the industry, the Christmas time. Similarly to last year, the company aims to hire 90,000 workers to help with the holiday rush. But merchants and retailers are facing another hard year shaped by shipping capacity. According to ShipMatrix estimates, US shipping demand will be greater than the available capacity by 4.7 million parcels a day, both throughout November and December. Although it is significantly less than last year’s 7.3 million shortfall, millions of packages are still at risk of not being on time for Christmas unless consumers shop early. FedEx is clearly struggling with higher labor costs, as well as the fact that pandemic-induced e-commerce boom has slowed down.

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

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BenzingaEditorial

Robinhood Is Making a Long-Awaited Move

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On Monday, Bloomberg News reported that Robinhood Markets Inc (NASDAQ: HOOD) is making a long-awaited move as it is testing a crypto wallet feature for its app which would allow its customers to send and receive digital currencies.

The company’s team is very much at work as evidence appeared in the software beta version of its Apple Inc (NASDAQ: AAPL)-owned iPhone app in the form of a hidden image portraying a waitlist page for users to sign up for the feature, with the app having a code for cryptocurrency transfers as it’s already possible for Robinhood customers to buy and sell popular cryptocurrencies, including ethereum and dogecoin along with bitcoin. But this time, they will be able to manage all of their crypto holdings through a wallet in the app, without converting them into dollars. Its industry peers such as Coinbase Global Inc. (NASDAQ: COIN) already offer their own crypto wallets which offer a single place for customers to store all virtual currencies which are protected by a private key.

Crypto wallet is a priority

On the latest earnings call, the CEO Vlad Tenev already mentioned that this feature is a priority for the company’s developers. However, being able to deposit and withdraw cryptocurrencies on a large scale is complex the company wants to make sure the process is done correctly.

He didn’t disclose any dates regarding the launch, but the support and testing in its app suggest a debut could be in the near future.

Second quarter earnings

During the quarter that ended in June, revenue more than doubled to $565 million due to a massive surge in crypto trading. They surged more than 131% in the period from $244 million a year ago.

Crypto trading alone brough in $233 million to the revenue table which is more than half of all the transaction-based revenue of $451 million. Cryptocurrency’s share of revenue jumped from first quarter’s 17% to more than 51%.

Unfortunately, the bottom line was a net loss of $502 million, or $2.16 per share. Costs that arose from the change in fair value of convertible notes and warrant liability took out $528 million from equation whose end result was significantly different compared to a profit in the same quarter last year.

Outlook

When it announced its latest results, the company also warned of seasonal headwinds and lower trading activity across the industry that it expects to result in lower revenues for the quarter that will end on September 30th, 2021, along with considerably fewer new funded accounts compared to the June quarter.

There is also the volatility of crypto to consider as the company makes money on this front by routing orders to market makers that the company claims to offer “competitive pricing”. Its revenue is the percentage of the order value and regulators are already questioning this model.

Regulatory hurdles

Regulators are questioning Robinhood’s controversial pivot into cryptocurrency markets. As a result, the company paid a $65 million penalty to the SEC in part for failing to satisfy its duty of “best execution”. U.S. lawmakers are questioning the SEC about when it intends to place further restrictions around the practice, so Robinhood shareholders are bound to get nervous as they wait for the outcome.

But even if the practice does not get altered, the question arises as to how much can Robinhood grow if it’s limitedto the U.S., considering that expanding to markets like the U.K. or Europe would imply abandoning the zero-commission model.

The verdict – risk could outweigh the reward

Robinhood’s shares have had a wild ride since it the company’s NASDAQ debut at the at the end of July. Democratize the market for amateur investors is a big deal as technology is constantly changing the way consumers purchase goods and services but app-based investing has a much stronger impact on young people’s finances. Robinhood did a great job by plugging in tens of millions of first-time investors into the financial markets through their smartphones in a simple and user-friendly way. It deservedly became the poster child of this revolution. Despite the latest report quarter which portrayed strong results, the question is how long can the good times last as the company is facing an increasing amount of regulatory hurdles which could easily result in the risk outweighing the rewards.

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

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BenzingaEditorial

One Way or Another, Rivian Could Make History

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Until this month, the U.S. had only one all-electric automaker, the all-mighty Tesla Inc (NASDAQ: TSLA).  Last week, Rivian Automotive Inc. rolled its first pickup truck for regular customers off its assembly line in its Normal, Illinois plant with first deliveries just around the corner. Rivian is doing much more than challenging Tesla- it is delivering the world’s first all-electric pickup truck.

Besides legendary automakers transforming their models for the electrification era, there are also many electric start-ups in the race to deliver a mass-market EV such as Lordstown Motors (NASDAQ: RIDE) but unlike all of them, Rivian is, after a dozen years of effort, on the verge of actually doing it. No wonder that Ford Motor (NYSE:F) invested $500 million back in 2019 and Amazon.com Inc (NASDAQ: AMZN) ordered 100,000 delivery vans to be shipped in stages through 2030. This July, both Ford and Amazon raised their anties, leading a second, $2.5 billion investment round.

The electric pickup is almost here- and it’s like nothing we’ve ever seen

Two weeks ago, Motor Trend reviewed Rivian’s R1T and it was everything but disappointed as it named it “the most remarkable pickup we’ve ever driven.”

Rivian’s $67,000 pickup will soon be accompanied by two rivals on the road: the electric version of America’s bestselling Ford’s F-150 named the Lightning and Tesla’s Cybertruck. But by the end of the year or perhaps even longer, Rivian will have the roads all to itself.

Besides being America’s favorite vehicle, electrifying pickups is a big deal for the fight against climate change as today’s ICE versions of prodigious drinkers of diesel and gasoline. According to Chris Harto, a policy analyst at Consumer Reports, the gains in reducing emissions will be much larger compared to shifting from a Toyota Motor (NYSE: TM) Prius to General Motors’ (NYSE: GM).

2022

Rivian’s electric adventure vehicle will be challenged by many more competitors whose debut is scheduled for 2022 such as Atlis Motor Vehicle’s tech-advanced XT and Hercules Electric Vehicules’ Alpha pickup that will bring luxury into the equation.  Both vehicles will be equipped by Worksport Ltd’s (NASDAQ: WKSP) revolutionary solar-powered technology TerraVis.

The road ahead

If Rivian thrives, it will be much more than a quiet ride to historic glory as it will be only the third American automaker in a century to not to die by bankruptcy. The others are Chrysler that was founded in 1925, and Tesla itself in 2003. Additionally, last Wednesday CNBC reported that Rivian is planning its public debut later this year, pegging the company’s value up to $80 billion. If correct, it could end up being one of the biggest US IPOs in a decade. Therefore, this EV startup has more than one way to enter history.

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

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