Amazon became the second U.S. company in a week to join the trillion-dollar club, while Apple and Tesla smashed expectations; Disney is suffering from the coronavirus situation, Facebook is in trouble — again, and more earnings news.
Jan. 31, 2020
#AmazonPrimed
Shares of Amazon (NASDAQ: AMZN) climbed as much as 11% in extended trading on Thursday after smashing earnings expectations for the fourth quarter.
How did Amazon do so well?
After Amazon’s fourth-quarter earnings, I had a new outlook on the future. Someday, I will be awoken in my Amazon-owned house by my Alexa butler who will feed me my Amazon Meal Kit breakfast before I take my autonomous Amazon vehicle to the Amazon fulfillment center where we all work and give my morning oath to Supreme Leader Bezos. Ok, maybe that sounds more Orwellian than it was meant to, but in short, the company had a very good fourth quarter. The company’s stock surged 11% after hours, bringing its market cap above $1 trillion, following a report that EPS was $6.47 versus expectations of $4.03, while revenue grew more than 20% to hit $87.44 billion versus expectations of $86.02 billion. The real winner though was Amazon Web Service, which despite growing competition, grew 34.0% to take in $9.95 billion in revenue. Amazon looks ready to take on Apple for the crown of America’s most valuable brand.
Bet you didn’t know
Jeff Bezos will have reclaimed the title of ‘World’s Richest Person’ following the report as his net worth grew $12 billion overnight.
#AppleServices
Wearables, Home, and Accessories revenue passed out Mac in revenue for the first time this week according to Apple’s (NASDAQ: AAPL) earnings report.
How did this happen?
The computers that put Apple on the map have been surpassed by the gadgets that make up Apple’s future, at least in terms of sales. Apple’s catch-all category, which includes AirPods and Apple Watch among a bundle of other items, surged to $10 billion in revenue in the quarter ended December 31 — more than the $7.1 billion Apple generated from selling Mac computers. Although Apple doesn’t break out Apple Watch or AirPod sales individually, CEO Tim Cook stated that the company’s ‘Wearables’ segment could be a Fortune 150 company on its own, implying that it generates more than $20 billion in revenue per year. Oh, I also forgot to mention that iPhone revenue was up 8%, Services grew 17%, and earnings per share hit $4.99 versus analyst expectations of $4.55. Needless to say, this ‘fruit company’ has had a bountiful harvest.
Bet you didn’t know
Apple now has 1.5 billion active devices in use around the world, which covers roughly 20% of the planet’s population.
#DisneyCoronaFears
The Walt Disney Company (NYSE: DIS) is not immune to the coronavirus’ effects as the House of Mouse is forced to shut down its Asian parks.
What has the closure cost Disney?
The impact of the coronavirus on the ‘happiest place on earth’ was apparent when Disney’s stock fell 3% on Monday due to concerns. Last week, Disneyland Shanghai was closed indefinitely as the virus spread, with the Hong Kong branch closed this week and Tokyo mulling over a similar decision should the situation worsen. The closures come during peak travel time in the region due to the Lunar New Year festival. Disney’s park segment makes up roughly a quarter of the company’s revenue, bringing in $26.2 billion in fiscal 2019. Disney will also sweat over the potential closure of hundreds of theatres, mere weeks before the release of the studio’s live-action remake of ‘Mulan’. The movie is Disney’s first Asian-led live-action endeavor and was expected to perform very well in China. However, analysts believe that downward pressure on earnings will be limited relative to the company’s overall financials and that investors are still primarily focused on the “outsized” success of streaming service Disney+
Bet you didn’t know
Disney has its own ‘Wedding Pavillion’ in Florida, dedicated specifically for marriage ceremonies and vow renewals.
#MoreEarnings
Several other MyWallSt stocks showcased their holiday quarters this week, including MasterCard and Starbucks.
So how did they get on?
Align
Dental service Align (NASDAQ: ALGN) came out with quarterly earnings of $1.53 per share on revenue of $649.79 million, and earnings growth of more than 10%. Over the last four quarters, the company has surpassed consensus EPS estimates four times.
Coca-Cola
Coca-Cola (NYSE: KO) on Thursday reported quarterly revenue that topped analysts’ expectations as new products under its namesake brand boosted sales. EPS came in at $0.44 on top of revenue of $9.07 billion, with the stock rising nearly 3% following the report.
Idexx
Veterinary services firm Idexx Technologies (NASDAQ: IDXX) reported revenue growth of 10% to $605 million in its fourth quarter, an increase of 19% year-over-year. Full-year EPS rose 15% to $4.89, while the company increased its 2020 guidance to between $2,620 million and $2,655 million.
MasterCard
Mastercard (NYSE: MA) beat Wall Street estimates for quarterly profit on Wednesday as customers spent more on its cards during the U.S. holiday shopping season. Around 29.38 billion transactions were processed, a 19% increase from a year earlier, while revenue rose 16%.
Microsoft
Tech giant Microsoft (NASDAQ: MSFT) beat expectations with earnings per share of $1.51 on top of revenue of $36.91 billion, while overall revenue is up 14% year to date. Azure revenue growth came in at 62%, while the JEDI Pentagon contract is expected to bring in $10 billion in revenue over the next decade.
PayPal
Payment software firm PayPal (NASDAQ: PYPL) came out with quarterly earnings of $0.86 per share on revenue of $4.96 billion, surpassing Wall Street estimates by 0.37%. There was some disappointment though as acquisitions such as Honey weighed on its forecast.
Starbucks
Global coffee-maker Starbucks (NASDAQ: SBUX) reported earnings per share of $0.79 on top of revenue of $7.1 billion, versus analyst expectations of $0.76 on $7.1 billion, while same-store sales were up 5% versus the 4.4% expected. It forecast 2020 revenue to rise between 6% and 8%.
Tesla
Elon Musk can keep on dancing as Tesla (NASDAQ: TSLA) beat expectations on Wednesday with earnings per share of $2.14 over revenue of $7.38 billion versus expectations of $1.72 over $7.02 billion, while automotive gross margins came in at 22.5% for the quarter.
Bet you didn’t know
As the final quarterly report of the last decade, it might interest readers to know that the 2010s were the first decade in history to not experience a single day of recession.
#AndFinally
As I am writing this, a news prompt has just popped up reading: “Facebook (NASDAQ: FB) reaches $550 million settlement in facial recognition lawsuit”, summarizing the entire point of this piece. It turns out that constant legal proceedings and regulatory challenges can cost a company a lot of money in fees and content moderation. In its Q4 earnings report this week Facebook reported full-year 2019 expenses of $46.71 billion, up 51% compared to 2018, coinciding with an operating margin drop from 45% to 34% over 12 months. The record $5 billion fine issued by the FTC in July hit profit margins hard for Facebook, which is still on the defensive since the July 2018 Cambridge Analytica scandal. Despite a relatively successful earnings report, these high costs couldn’t be overlooked, as Facebook stock fell 6%, wiping out $30 billion in market value. It seems like Facebook’s ‘bad boy’ behavior is finally starting to catch up with it.
What has Mark got to say for himself?
“My goal for this next decade isn’t to be liked, but to be understood,” Zuckerberg said after the earnings call. “Because in order to be trusted, people need to know what you stand for.” Ok Mark, perhaps you should also start fact-checking your ads, and then ask for trust.
Bet you didn’t know
Facebook has over 2.5 billion monthly active users — roughly 1 in every 3 people on earth.
The Week In Numbers
11 PM
Is the Greenwich Mean Time tonight that the UK will officially leave the European Union after more than 3 years of negotiations.
2,000
Starbucks locations in China were closed this week due to coronavirus fears.
500,000
is the number of cars Tesla CEO Elon Musk expects to ‘easily deliver’ in 2020.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.