eToro’s weekly Nasdaq focus: Josh unpacks all the Meta tech reports, but has Tesla bitten off more than Elon can tweet?
In this Stockhead series, Josh Gilbert – market analyst at global investment platform eToro – gives investors the scoop on all things Nasdaq related; the key market themes, along with popular investment trends based on eToro’s data and insights.
It was anything but a quiet week on the Nasdaq with wild price swings and most of big tech reporting earnings.
The biggest winner from this week was Meta, who beat earnings expectations but fell short on revenue and saw its share price climb 17 per cent in Thursday’s session. In addition, Meta’s daily active users jumped to 1.96 billion, up 31 million from the last quarter and beating expectations of 1.94 billion. This metric has helped ease concerns, at least for now, that Facebook was losing steam and that the platform had ‘peaked’.
Meta’s short-term earnings outlook is appearing clouded by several uncertainties such as increased social media competition, reopening headwinds and Apple’s privacy changes that management seems to have no real solution for. Meta’s shares are now trading at 14x forward earnings and are down by 48 per cent this year.
Although the short-term outlook appears pretty bleak, it’s wise not to write off Mark Zuckerberg and his team just yet, given his track record of success over the last decade.
We also had big beats from Microsoft and Apple, two tech behemoths.
Microsoft beat expectations on both the top and bottom lines, with the company’s revenue growing by 18 per cent year-over-year. In addition, Microsoft’s intelligent cloud revenue grew by 25 per cent year-over-year to USD$18.9 billion, but importantly, its Azure offering in constant currency terms increased by 49 per cent year-over-year, higher than analyst expectations.
Apple has also successfully navigated all the obstacles brought by the global pandemic. This quarter was no different, beating expectations on both the top and bottom lines, charged by solid iPhone demand. Apple also announced a USD$90 billion buyback program and a 5 per cent increase in its dividend, flexing its colossal balance sheet to investors.
However, that’s where the good news ends for Apple.
With Covid-19 lockdowns across China, supply constraints may catch up with the tech giant. Apple relies heavily on production from the region, and CFO Luca Maestri has said supply chain constraints could impact revenue by up to USD$8 billion next quarter.
Despite strong beats from some tech names, we also saw a few misses.
Alphabet saw a rare revenue miss, with a weaker than expected performance from YouTube with Apple’s iOS privacy changes having an effect. Google plans to expand ads in YouTube Shorts, which are averaging 30 billion daily views and can possibly rival TikTok’s offering.
Amazon reported a loss in the first quarter and provided forecasts that fell short of expectations, sending the stock plummeting in after-hours trading on Friday morning. Sales expectations for the second quarter were USD$121 billion, falling short of analysts’ estimates of USD$125 billion.
With a workforce of nearly 1.62 million people, the eCommerce giant’s costs are mounting. Amazon announced overall operating costs of USD$112.7 billion for the quarter.
Finally, Twitter accepted Elon Musk’s USD$44 billion bid to take over the company and go private. Although yet to be finalised, the deal values the company at $54.20 a share. However, the concern is for Tesla shareholders, as its CEO is now entering into another venture outside of the company. Furthermore, the significant acquisition could also mean we see Musk sell down some of his Tesla holdings. The street is nervous about this move from Musk, with Tesla shares tumbling 12 per cent in Tuesday’s session.