Tesla Reaches $1 Trillion Valuation and Facebook Rebrands as Meta

Greetings everyone! We are at the peak of earnings season right now so this week's update will be focused on earnings.

Tesla (TSLA) reaches $1 trillion valuation

On Monday, shares of Tesla soared over 12 percent, propelling the company to reach a market capitalization of over $1 trillion USD. The company, which went public on June 29th, 2010, was buoyed on Monday from news that Hetz was placing an order for 100,000 electric vehicles. The deal is reportedly worth $4.2 billion and delivery to Hertz is expected to start as early as next month. Also, on Monday, Morgan Stanley reiterated its Outperform rating and increased its target price on Tesla from $900 a share to $1200 a share.

Source: TechCrunch 10/25/21

Investors disappointed with Facebook (FB) earnings

Shares of Facebook sold off over 5% on Tuesday as investors did not seem impressed with its recent earnings report [1]. Facebook also issued revenue guidance that was lower than what Wall Street analysts were expecting. Its guidance for fourth quarter revenue is between $31.5 billion and $34 billion, compared to analysts’ expectations of $34.8 billion [2]. For the month of September 2021, daily active users were up 6% compared to the same period last year [3]. Additionally, the company will break out reporting of its division focused on hardware and augmented reality as its traditional ad business is facing pressure.

On Thursday, the company also announced a name change to Meta. Meta will focus on the “metaverse,” the next generation of online engagement. The Facebook app will retain its current name [4].

1. Source: CNBC 10/25/21
2. Source: CNBC 10/26/21
3. Source: Facebook Investor Relations 10/25/21
4. Source: NPR 10/28/21

Ford (F) issues higher 2021 profit guidance and is resuming a dividend

Ford shares were up in the extended hours session on Wednesday by more than 9% after the company reported earnings. At the start of the pandemic, Ford suspended dividend payments, but the company announced on Wednesday evening that the quarterly dividend would resume and the first payment is expected to be December 1st.  Ford has built up one of the largest vehicle inventories in the industry and said that there is strong demand for its vehicles. A year ago, the company recorded an average transaction price of $45,891 and in Q3 2021, the average selling price for a Ford hit a record high of $51,818. Ford is also investing heavily in electric vehicles and has stated that by 2030 it promises to have 40% - 50% of its global sales volume to come from electric vehicles.

Source: Bloomberg 10/27/21

Podcasts boost Spotify (SPOT) results

Spotify quarterly results were booked by growth in podcast advertising. The company stated that advertising revenue would be worth more than $1 billion euros in annual advertising sales for the first time this year. Advertising sales for Q3 were up 75%. According to CEO Daniel Ek, the company is ahead of schedule in building out its podcasting bins and the segment would one day account for more than 20% of total sales.

Spotify also stated that Asian markets are driving a lot of user growth. The company added seven million paid subscribers this quarter and performed better than expected in South Korea, Pakistan, Bangladesh, Indonesia and the Philippines.

While we are on the topics of podcasts on Spotify, take a moment to listen to our own podcast, Fintech Underground.

Source: Bloomberg 10/27/21

Amazon (AMZN) shares fall after earnings

Amazon reported earnings on Thursday after the market close and the stock sold off in the extended hours following the announcement. Earnings for the quarter were $6.12 a share compared to analyst expectations of $8.92 a share. Revenue was also light relative to expectations, coming in at $110.81 billion vs expectations of $111.6 billion [1]. Amazon said that costs to add employees and resolve supply chain issues would cut into fourth quarter profits. The company gave revenue guidance for the quarter to end in December in the $130-$140 billion dollar range, compared to exceptions of revenue for the quarter to be $141.6 billion. Amazon stated that investors can expect an operating profit from $0 to $3 billion in the fourth quarter [2].

CEO Andy Jassy stated, “In the fourth quarter, we expect to incur several billion dollars of additional costs in our consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs … It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners.”

On the flip side, Amazon Web Services posted a nice quarter with sales of $16.1 billion, up more than 39%. In an interesting fact, revenue from services surpassed revenue from retail sales the first time in company history.

1. Source: CNBC 10/28/21
2. Source: Bloomberg 10/28/21

Microsoft beats earnings

Were Microsoft earnings good? According to CNBC commentator Jim Cramer, Microsoft’s quarter was “the best quarter of the year.” Microsoft’s cloud business, Azure, posted a 50% YoY growth in revenue during the company’s fiscal Q1 2022. Net income came in higher than analysts expected. Net income for the quarter came in at $2.71 a share compared to analyst expectations of $2.06 a share [1]. The company also beat on revenue, reporting $45.32 billion compared to analysts expectations of $43.87 billion [2].  

LinkedIn was also important for the company. Microsoft CEO Satya Nadella said more users are joining the platform and that is driving more engagement. Mr. Nadella pointed to a 160% YoY increase in the number of hires on the network as evidence of user engagement [3].

1. Source: TechCrunch
2. Source: CNBC Television
3. Source: Winbuzzer 10/27/21

About the Writer

My name is Allen Spence and I have been working in the retail brokerage industry for over 16 years.  I joined Alpaca in March of 2021 as a Brokerage Operations Consultant. Before joining Alpaca I have worked in a retail branch environment, call center for active traders, and spent over seven and a half years as the team lead on an equity trading desk for a large regional broker dealer.  I’m excited to be at Alpaca helping bring the markets to investors worldwide. I live in Florida and enjoy traveling and spending time with my family.

About Alpaca

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