vestact posted: " Market Scorecard Yesterday, the S&P 500 and the Nasdaq both suffered their second straight day of losses. Companies are still battling a host of challenges including a tough operating environment, growing competition, a strong US Dollar, and a" Vestact - Money with a dash of funny
Yesterday, the S&P 500 and the Nasdaq both suffered their second straight day of losses. Companies are still battling a host of challenges including a tough operating environment, growing competition, a strong US Dollar, and a slowdown in advertising spend, all of which have taken a toll on big tech.
GDP data showed that the US economy rebounded by 2.6% year-on-year after two quarterly contractions, but also highlighted that consumer spending remains under pressure because of inflation.
In company news, Shopify jumped 17% after reporting earnings that beat expectations, Amazon plunged 12.7% after hours as its sales outlook trailed estimates and Apple shares rose 0.4% in postmarket trading after a slight beat. Elsewhere, Elon Musk finished his $44 billion acquisition of Twitter, which means shareholders will be paid $54.20 per share and the social media network will now operate as a private company.
Yesterday, the JSE All-share closed up a tiny 0.03%, the S&P 500 fell 0.61%, and the Nasdaq dropped by 1.63%.
Our 10c Worth
Byron's Beats
Investors are very interested to see what is happening under the Meta Platforms hood. After Wednesday's results release, the market did not like what it saw. Revenues were down 4%, costs were up 19% and users only increased by 4%. The stock tumbled 24% on Thursday. Ouch.
It seems Mark Zuckerberg is hell-bent on building the Metaverse at breakneck speed. Guidance for expenses are looking to increase from $85 billion in 2022 to $100 billion in 2023. The company has employed 19 000 more people versus this time last year, an increase of 28%. If they succeed and manage to corner the virtual world, then this of course was money well spent. But clearly the market is not convinced.
The operating business had a decent quarter. Ad revenue beat expectations thanks to positive trends from Reels. However, the macro environment is tough and advertising spending is one of the first items to be cut. The stronger dollar does not help either.
Meta has over 3.7 billion monthly users on their family of apps and trades at 10 times earnings. The stock is in deep value territory. They are betting the house on an unproven concept. We are keeping a very close eye on their progress and may suggest a sale if we feel there is no light at the end of the virtual tunnel. But for now you should hold the stock as we feel the existing business is undervalued.
One thing, from Paul
Our investments are in companies, and their share prices are set in open markets at the midpoint between the buyers and sellers on the day. There's a refreshing honesty about that.
Good results and a helpful macroeconomic backdrop lead to share price gains. The value of our portfolios rise. But the converse is also true. Disappointing company-level developments and tightening financial conditions result in more sellers than buyers, so stock prices go down.
Sometimes the slumps are quite large, which results in all sorts of wailing, hand-wringing, mea culpas, hot takes, and complaining about company management strategies.
This US earnings season has been mixed. We've enjoyed some nice beats (most notably Visa and Apple) and endured some hidings (Google, Meta, Amazon).
Anyway, we need to stay the course. The mood is tetchy and traders are acting irrationally. Investors with long-term money to deploy are sitting on their hands Don't overthink these short-term moves. The global economy is still recovering from the Covid pandemic, inflation is troublesome and geo-political worries are a little more prominent than usual.
Good times will return. In the words of the great Uncle Demi (and others), "tough times never last only tough people do".
Bright's Banter
Spotify reported a mixed set of third-quarter numbers. Total monthly active users are up 20% to 456 million - a whole 6 million above guidance, representing its largest Q3 growth to date. However, this didn't translate to profit as net income went backward. Probably the reason why the share price is down so much year-to-date.
Total revenue came in at EUR 3.04 billion, up 21% year-on-year. Premium subscriber revenue grew 22% to EUR 2.7 billion, while Ad-supported revenue only grew 19% to EUR 385 million. Most regions saw double-digit growth except for Europe where the company has the highest user penetration.
Margins took a 24.7% hit as the company accrued expenses related to the renewal of massive publishing contracts outside the US. The operating loss grew to EUR 228 million due to factors such as increasing staff costs as the streaming giant expands its global footprint.
Spotify has over 4.7 million unique podcasts on the platform, up from 4.4 million in the last quarter. Podcast listenership saw double-digit growth year-on-year. However, the most interesting bit is that CEO Daniel Ek told Reuters that Ye's music will remain on the platform because it doesn't violate the company's hate speech policy.
From the Santos to the Tank, Cartier watches are known for their unparalleled luxury designs. The company has revealed a new 18k gold pebble-shaped timepiece with a gold and blue crown - Cartier launches new Pebble.
Formula 1 has partnered with Kindred Concepts to launch the very first F1 arcade in London. This venue is fitted with state-of-the-art racing simulation technology with immersive motion and audiovisual effects - ultimate entertainment venue.
Signing Off
Asian markets are lower this morning as technology stocks dragged down major indices. Shares of miners and steelmakers also declined amid weakness in iron ore prices. The Hang Seng, Topix, and Shanghai Composite are all in the red. Hong Kong equities are still trading at a 13-year low.
US equity futures are red after Amazon's disappointing forecasts reminded markets that consumers are starting to feel the pinch. The Rand is back trading around R18 to the US Dollar.
The sun is shining after some wonderful rains on the highveld, have a lovely weekend.
No comments:
Post a Comment