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BenzingaEditorial

Washington’s Birthday Week – The 411

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Last week delivered more record highs due to a combination of factors. There was a fresh round of COVID spending, vaccines are being administered across the globe and stock market has witnessed strong fourth quarter corporate earnings from some of the largest S&P 500 companies. This week will be shortened due to Monday’s Presidents Day holiday, also known as  Washington’s Birthday, but there will be quite a few earnings reports from notable retailers.

The IPO market takes a breather

After a busy start of the year, the IPO market quiets down with only one scheduled IPO. The newly-formed commercial mortgage REIT AFC Gamma (NASDAQ: AFCG) operates in cannabis finance by originating, structuring, underwriting and managing loans for established companies operating in the industry. The company plans to raise $119 million at a $240 million market,

Baidu and Shopify

Shopify (NYSE:SHOP) is trading near its all-time highs. With merchant sales doubling YoY during the third quarter, the market is eagerly waiting results for the crucial holiday quarter.

Wall Street expects Baidu (NASDAQ: BIDU) to earn $2.61 per share on revenue of $4.65 billion. Baidu shares have been on fire, skyrocketing about 150% over the past six months, greatly exceeding 16% rise in the S&P 500 index during the same timespan. This remarkable performance might be just the beginning as the Chinese tech giant is reportedly in early developments of a stand-alone AI semiconductor company.

Walmart

Moving on to another e-commerce success, expectations for Walmart (NYSE: WMT) are high as it has taken a page out of Amazon’s (NASDAQ: AMZN) playbook. Wall Street expects earnings of $1.50 per share on revenue of $148.11 billion. Many analysts project the retail giant has secured more market share gains not only for its physical stores, but also from its expanded e-commerce capabilities. Walmart grew revenue, while sacrificing profits to enhance the customer experience and the stock market has applauded its efforts as digital revenue grew tremendously at an average of 35% annualized gains over the past five quarters. Walmart’s results have been nothing short of impressive, including record top-line beats, strong same-store sales, consistent execution across all product categories and margin expansion. But the company is now facing much tougher comps and it needs to show it can it continue to deliver.

Dropbox 

On Thursday, we will find out how much has Dropbox (NASDAQ: DBX) benefited from the work-from-home trend. Despite its strong position in home-work economy, the document storage and cloud company has been largely ignored, compared to Zoom Video (NASDAQ: ZM), DocuSign (NASDAQ: DOCU), Fastly (NYSE: FSLY) and other cloud stocks that became synonymous with work-from-home. Last week, it announced it will cut its global workforce by 11% and analysts have applauded the move, giving investors confidence that the company will do what it takes to hit its profit targets. On Thursday, it needs to show it can monetize its user base to sustain long-term profitability.

Roku

Roku (NASDAQ: ROKU) is another stock that has been on fire as it soared  more than 100% over the past three months, driven by rapid revenue and account growth due to lockdowns and new streaming entrants. Although Wall Street expects a loss of 7 cents per share on revenue of $613.07 million, there’s more to come as advertising dollars that are shifting from linear television to streaming. The optimism is also centered on Roku’s growth prospects which are now much more favorable, particularly with dominant streaming services such Netflix (NASDAQ: NFLX) and Hulu showing strong growth trends, combined with the emergence of Apple’s (NASDAQ: AAPL) Apple TV+ and Disney’s (NYSE: DIS) Disney+ platform. As more households continue to cut the cord and the streaming continues to expand, concerns regarding Roku’s valuation should begin fading away.

Outlook

As for the pandemic that is still shaping our everyday lives, even though global cases have reached 108.81 million and deaths topping 2.39 million, there are some bright spots. The seven-day average of new cases fell below 100,000 which is the lowest since early November, while the number of hospitalizations have also fallen sharply. Themarket is shifting its focus on reopening the economy. This week might be shorter but it won’t be any less exciting as we mark the end of the fourth quarter earnings season, which ended up being far better than anyone expected.

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

Apple Is Shaking Facebook’s Revenue

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On Monday, shares of the social media giant rose 2% in extended trading as investors focused on earnings beat and looked past the massive and ongoing whistleblower scandal. However, despite better-than-expected third-quarter earnings, Facebook Inc’s (NASDAQ: FB) revenue missed estimates due to Apple Inc’s (NASDAQ: AAPLE) privacy changes.

Third quarter figures

Revenue in the third quarter rose 35% from a year earlier to $29.01 billion.

Net income rose 17% to $9.2 billion, resulting in earnings per share of $3.22.

Daily active users (DAUs) amounted to 1.93 billion, exactly as expected by StreetAccount analysts survey, whereas monthly active users (MAUs) amounted to 2.91 billion, slightly below the Street Account estimate of 2.93 billion. Average revenue per user (ARPU) amounted to $10.00.

Going against TikTok

The world’s largest social network is facing an existential crisis represented by an aging user base. As part of an effort to make its platforms more appealing to users between the ages of 18 and 29, Facebook will make significant changes in the next year to focus more on its full-screen video Reels feature that competes directly with TikTok. CEO Mark Zuckerberg warned that this shift to serve these young adults will take years to be fully executed. Zuckerberg has high hopes for this feature, expecting it to ultimately it will be as significant to Facebook as the adoption of the News Feed and Stories features.

The metaverse is in the making

Facebook of tomorrow should look very different than the advertising-based business of today.

The first glimpse of this transformation will be seen by the Facebook Reality Labs unit that focuses on hardware, augmented reality and virtual reality products.

Facebook expects its investment in the hardware and VR segment to trim operating profit in 2021 by approximately $10 billion. As a reminder, it announced it is forming team who will work on the digital universe in which multiple people can interact within a 3D environment back in July. Two months later, it announced Andrew “Boz” Bosworth, the hardware boss, will be taking over as Chief Technology Officer next year.

Fourth quarter guidance

The social media giant announced that as of the undergoing quarter, its Facebook Reality Labs will be included into its own reporting segment. The other revenue segment will come from its apps, including Facebook, Instagram, Messenger and WhatsApp, as well as other services.

Fourth quarter guidance

Facebook expects revenue for the undergoing quarter to be in the range between $31.5 billion to $34 billion which is below analyst projections of $34.8 billion. Precautions have been taken due significant uncertainty owed to continued headwinds from Apple’s iOS 14 updated as well COVID-related factors and the overall macroeconomic environment. Just like Snap (NYSE: SNAP) whose shares tanked 27% after its disappointing earnings report last week, even Facebook’s business was disrupted by privacy changes.

What about the Facebook Files?

Frances Hagen released internal documents that showed that the number of teenage users of the Facebook app in the U.S. has declined by 13% since 2019, with a projected drop of 45% over the next two years and the number of users aged between 20 and 30 declining by 4% during that time frame, Haugen initially shared documents with The Wall Street Journal but she appeared before a Senate panel earlier this month to testify, basically saying that the company puts profit above the safety and health of its users. The reports show that Facebook is aware of many of the harms its platforms cause, particularly to teenage girls, but is not taking action to address or rectify them. She also claimed her intention was to ‘fix’ the company, not harm it.

Zuckerberg began the earnings call rebutting the claims and referred to the scandal as “a coordinated effort to paint a false picture of the company by selectively using internal documentation. Zuckerberg also expressed his opinion that social media is not the main driver of these issues which is why it probably can’t fix them by itself either.

Takeaway

It seems that investors shrugged off the internal documents that showed, among other things, the detrimental effect of Instagram on teens’ mental health. Earnings and the fact that the social media giant is adding $50 billion to its stock buyback program pleased investors. Despite regulators and the ongoing document dump, Facebook is preparing for a massive transformation of its business model while its ad business keeps growing at a healthy pace.

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

P&G Is Making the Best Out of a Tough Situation

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Last Tuesday, The Procter & Gamble Company (NYSE: PG) topped Wall Street’s estimates both for its fiscal first-quarter earnings and revenue. Like its peers, Colgate-Palmolive Company (NYSE: CL), General Mills Inc (NYSE: GIS) and Kleenex maker Kimberly-Clark Corporation (NYSE: KMB), it resorted to price increases this year to help make up the difference. Price hikes did help offset higher freight costs but it wasn’t enough to keep up with climbing commodity costs. The company raised its forecast for inflation, predicting that higher commodity and freight costs could trim fiscal 2022 earnings by $2.3 billion, which is worse from its prior outlook of $1.9 billion. Upon the report, shares fell more than 2% in pre-market trading, putting the stock at risk of losing this year’s gains.

Quarter figures

For the fiscal first quarter that ended on September 30th, net sales rose 5% to $20.34 billion, topping expectations of $19.91 billion. Although mounting supply chain challenges took some shine off stronger quarterly sales., organic revenue, which strips out the impact of acquisitions, divestitures and foreign currency, increased by 4% YoY as it was helped by higher pricing and demand for laundry detergent, razors and healthcare products. But this figure looks less optimistic when compared to last year’s 6% spike.

Net income dropped 4% YoY due to higher expenses. It amounted to$4.11 billion, or $1.61 per share, whereas analysts surveyed by Refinitiv were expecting a bigger decline with earnings per share of $1.59.

Segments

P&G has benefited from resurging demand in the personal hygiene aisle as consumers returned to offices and social gatherings. But demand for pantry staples such as toilet paper has continued being just as resilient.

Health care which includes brands like Oral-B was the company’s top-performing segment this quarter, with organic sales growth of 7%.

Fabric and home care, P&G’s largest segment, saw an organic sales growth of 5%.

The grooming business that includes its legacy razors also enjoyed an increase in organic sales amounting to 4%.

The beauty and baby, feminine and family care units both experienced a 2% rise of organic revenue. The beauty segment owes it to hair-care and skin and personal-care divisions, that exhibited both higher volume and innovation in hair treatments. The baby unit benefited from more consumers buying premium Pampers diapers and pants, managing to offset the fall of organic sales of Charmin toilet paper and Bounty paper towels despite increased promotion spending.

All in all, the good news is that P&G grew sales across all of its business segments.

More price hikes

As increased pricing reaches store shelves, the company is closely monitoring consumption trends and while it is still early, it has not observed any notable changes in consumer behavior. The company will ramp up its productivity programs throughout the fiscal year and still plans to introduce innovation to improve value to follow up the higher pricing.

P&G CFO Andre Schulten announced price hikes on selected products from the beauty, oral care and grooming range, without intentionally prioritizing premium products.

Guidance

Despite the challenges, P&G sticked to its prior full year forecasts, both in terms of earnings and revenue. It is calling for fiscal year sales to grow 2% to 4% from the prior year and core earnings per share to increase in the range from 3% to 6%. After-tax commodity costs are expected to add up to $2.1 billion with freight expenses of $200 million. When it reported its previous quarter three months ago, management forecasted that the combined effect of commodity and freight costs would hit its fiscal 2022 earnings by $1.9 billion.

A steady outlook

P&G remains as one of the most efficient businesses on the market. Operating cash flow was almost $5 billion with nearly all of those earnings converted into free cash. Free cash flow conversion is expected to be as as high as 90% for the full fiscal year.

Making the best out of a tough situation

Management does not expect that commodity cost pressures will ease, but higher selling prices are supposed to soften the blow. The company has no other choice but to continue paying more for raw materials as well as fuel, while still experiencing truck driver shortages. By the looks of it, this won’t be the only time that higher costs weighed on the company’s profits as the company believes inflation is still increasing and taking a hit to consumer’s wallets. According to the Financial Times, it is dangerously approaching near its highest level in 13 years.

Supply chain costs would be higher than it had previously anticipated but P&G is doing the best it can by having backup suppliers, changing shipping routes, reformulating products and even limiting how much a retailer can buy.

Despite soaring commodity costs and supply-chain disruptions, the consumer products giant managed to continue growing its business in the latest reported quarter. Management did warn those issues will take a bigger bite out of fiscal 2022 earnings, but the company is still expecting another strong year for the business. All in all, as CEO David Taylor summarized it, the company delivered solid results in a challenging cost and operating environment.

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

A Big Earnings Week Ahead

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This week, many Wall Street darlings are set to report their latest quarterly results. Given the trend of stronger-than-expected results that have been posted by now, this week’s set of reports have a heightened bar to clear. Fortunately, it’s something that Big Tech companies, including Facebook (NASDAQ: FB), Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), showed they are well capable of. 2021 isn’t as bright as 2020 which was shaped by global pandemic that held the world’s population at home, fueling unprecedented demand for their software, and growth seems to be slowing down. Snap Inc’s (NYSE: SNAP) recent revenue miss and weaker-than-expected fourth-quarter guidance was a reminder of how earnings season can bring some major surprises, in both directions.

Facebook

After Snap’s  miss due to global supply and labor shortages, as well as recent changes to advertising tracking and measurement on iOS, investors will be looking to see if Facebook was caught up in the same headwinds on Monday after market close.But it’s always possible that the social network comes out unharmed from the challenges Snap struggled with.

There are certainly some reasons to think Facebook could at least avoid some of the iOS headwinds as unlike the teen mobile platform, the social network pioneer has a meaningful presence on desktop as well.

Microsoft

Wall Street expects Microsoft to report earnings per share of $2.07 along with revenue of $43.97 billion as demand is fueled by sustained work and learn from home trends. Although robust quarter results are likely, Microsoft is also expected to provide better-than-expected guidance to show it can maintain its impressive growth momentum.

Amazon

E-commerce and cloud giant could be similarly impacted by global supply and labor shortages but the question is how accurately did management account for these setbacks back when it provided guidance in its previously reported quarter. After all, it was already clear these issues will persevere until the end of the year.

On Thursday after the close, investors will be equally interested in Amazon’s third-quarter results as well as its Q4guidance as the holiday quarter typically represents a large portion of the company’s revenue and an even bigger share of its profits.

Alphabet

Although Google’s earnings aren’t as exposed to Apple’s privacy changes that knocked down Snap, Alphabet has its own set of worries. Antitrust issues could start to cost Google.

Google has invested heavily in developing aggregated measurement approaches to prepare for Apple’s privacy changes, but its primary headache continues to be antitrust scrutiny both in the U.S. and abroad. As a result, the company has announced last Thursday it will halve its app fees to 15% to ease the mounting pressure from developers, regulators and lawmakers who criticized its digital store for not being accessible enough.

Apple

On Thursday, Apple is about to answer some burning questions for investors. The tech giant will reveal how well its new products, like the iPhone 13, are selling, although actual sales figures won’t matter that much to overall quarter revenue as they were only present during the final days of the quarter. We’ll get big updates on Apple’s growing services segment along with an official sales projection for the critical holiday quarter ahead where investors will be looking how is Apple managing supply chain challenges. Apple is also facing its own set of regulatory pressures. Back in September said it would allow app developers like Netflix Inc (NASDAQ: NFLX) and Spotify Technology S.A. (NYSE: SPOT) to provide customers a link to create a paid account and avoid Apple’s in-app-purchase commissions that go up to 30%.

As of last Friday, about 23% of S&P 500 companies had reported their third quarter results, with FactSet reporting that 84% topped Wall Street’s expectations for earnings per share.

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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