Meta and Amazon surge after earnings reports

Hey Superheroes,

What a massive week for markets! The ASX 200, S&P 500, Nasdaq 100 and Dow Jones all closed at new highs earlier this week and five of the Magnificent Seven reported earnings.

Closer to home, Aussies celebrated inflation falling to 4.1% in the year to December. Its quarterly growth was the lowest since 2021.

Here are the stories you need to know.

Meta Platforms and Amazon surge in after-hours trading after releasing earnings

Meta Platforms, which just a year ago was priced at around $170, is now trading around $450 in the after hours market. This represents an approximately 14% gain from its previous close and brings Meta’s market cap to around $1.2 trillion.

Similarly, Amazon surged over 9% after reporting upbeat earnings.

Apple reported earnings alongside the two but failed to impress investors, seeing its stock fall slightly in the after hours market following its report. 

📈 Why is Meta surging?

For the first time in history, Meta announced a quarterly dividend payout of 50c per share. While that translates to an annual yield of about 0.5% based on its last closing price, paying cash dividends tends to represent confidence by management in the company’s outlook. This comes alongside plans of a $50 billion share buyback.

Zuckerberg also outlined Meta’s plans of further investment in AI to boost future advertising revenue.  

Here are some key numbers:

• Revenue: $40.1b actual vs. $39.2b expected by analysts
• EPS: $5.33 vs. $4.96 expected
• Daily active users: 2.11 billion vs. 2.08 billion estimated
• Monthly active users: 3.07 billion vs. 3.06 billion estimated

🛍️ Amazon’s new shopping buddy

Amazon posted strong Q4 2023 results that easily topped analyst expectations.  Here are the key numbers:

• Revenue: $170b actual vs. $166.2b expected by analysts
• EPS: $1.00 vs. $0.80 expected
• Amazon Web Services (AWS) revenue: $24.2b, in line with expectations
• Ad revenue: $14.7b vs. $14.2b excepted

Looking at these numbers alone might not spark much emotion, but you might be amazed hearing that Amazon only posted $278m in quarterly net income a year earlier. Yup… that’s an extremely far cry from last quarter’s income of $10.6b. 

Amazon also announced its beta launch of Rufus – a new AI-powered shopping assistant. 

📱 Apple’s performance was… 

While its fellow big tech comrades saw strong gains in the after hours market, it seems that investors were less than impressed with Apple’s earnings, with the company trading about 3% lower.

Here are the key numbers:

• Revenue: $119.6b actual vs. $117.9b expected
• EPS: $2.18 vs. $2.10 expected

Despite beating expectations, analysts noted that Apple’s revenue growth is expected to slow, citing the lacklustre growth in iPhone sales to be a big reason for this. Revenue from its wearables division, which includes Airpods and Apple Watches, also declined 11% over the year. Geographically, sales in China fell 13%. 

With the recent performance of big tech companies, Microsoft has now overtaken Apple as the largest publicly-traded company in the world.

🔦  Some other things we’re shining the Spotlight on:

• NEED MORE GOOGLE ADS: Despite Alphabet, Google’s parent company, reporting higher-than-expected revenue and earnings for last quarter, its shares slid over 6%. It seems that investors were unimpressed with the amount of ad revenue reported.

• MICROSOFT SITS ON A CLOUD: Microsoft outperformed overall estimates, spurred most by the outperformance of its cloud division which saw quarterly revenue growth of 28%. Its revenues from its productivity segment (Office) grew 12% and hardware and gaming segment by 18%. However, Microsoft shares have closed relatively flat for the week so far.

• WALMART’S BUY 1 GET 3: Walmart announced a 3-for-1 stock split to make its shares more accessible to investors and employees. Investors who own Walmart shares at close of 22 February will receive the two additional shares the next day.

• NICKEL INDUSTRIES’ STRATEGIC ADVANTAGE: Nickel mines in Australia have been shutting down due to drop in nickel prices, but Nickel Industries has thrived despite that. The Indonesian-based ASX-listed miner reported plans of a US$100m buyback alongside an increased dividend, sending its shares surging over 25% this week. 

Next Tuesday, we’ll be seeing the RBA release its next interest rate decision. On Wall Street, Alibaba, Disney and Uber are among those slated for earnings releases. 

Keep up to date with market news and insights by following us on Instagram, @superheroau!

That’s all for this week’s Spotlight!