Today is Wednesday, October 27, 2021.
Google’s YouTube Problem Revealed During Earnings Call
Shares of Google’s parent company Alphabet (Nasdaq: GOOGL) fell 0.92% in after-hours trading on Tuesday due to its earnings results that were very strong, except for YouTube.
Numbers: Google reported earnings per share of $27.99 and revenue of $65.12 billion. Both were better than analyst expectations.
YouTube Miss: Revenue for YouTube reached $7.2 billion, which was below the analyst expectation of $7.4 billion. CFO Ruth Porat attributed YouTube’s revenue miss to the new privacy features recently rolled out on iOS. These iOS changes have also challenged other social media platforms as well.
Other Headwinds: Google Cloud's revenue was also slightly below what analysts had projected. Traffic acquisition costs were also a little bit higher.
Final Thoughts: Despite these challenges, the stock analysts still like Google, which is up 61% this year. However, the YouTube news is - at least in the short-term - concerning.
Notable Earnings Today: Ford (NYSE: F), Boeing (NYSE: BA), Coca-Cola (NYSE: KO), McDonald’s (NYSE: MCD), Bristol-Meyers Squibb (NYSE: BMY), ServiceNow (NYSE: NOW), Spotify (NYSE: SPOT), Six Flags (NYSE: SIX), eBay (Nasdaq: EBAY), Upwork (Nasdaq: UPWK).
Notable IPOs Today: Informatica Inc. (NYSE: INFA), Arteris, Inc. (Nasdaq: AIP), Rent the Runway, Inc. (Nasdaq: RENT), LAVA Medtech Acquisition Corp. Unit (Nasdaq: LVACU), OPY Acquisition Corp. I Units (Nasdaq: OHAAU), Marpai, Inc. Class A Common Stock (Nasdaq: MRAI), Deep Medicine Acquisition Corp. Unit (Nasdaq: DMAQU), Innovative International Acquisition Corp. Unit (Nasdaq: IOACU).
Notable Equity Crowdfunding Campaigns Ending Today: Acre Mezcal (StartEngine), PaQui Tequila (StartEngine), Rayton (StartEngine), GolfBoard by Sol Boards (StartEngine), Liberty Access Technologies (StartEngine), Red Eye Louie’s (StartEngine), Saebo (StartEngine), Garrett Music Academy (SMBX).
Notable Economic Events Today: Durable goods (8:30 a.m. ET). Crude oil inventories (10:30 a.m. ET).
Microsoft Eyes Record After Strong Earnings
Shares of technology giant Microsoft (Nasdaq: MSFT) jumped 2% in after-hours trading after the company reported good earnings. The stock is close to an all-time high.
Numbers: Earnings per share was $2.27, better than the $2.07 target that analysts predicted. Revenue reached $45 billion, ahead of the $43 billion that analysts expected.
Behind the Growth: Net income increased 48% to $20.5 billion. Two segments stood out for the company: LinkedIn, which grew 42%, and Microsoft’s cloud computing service Azure, which grew 50%.
Quote: “Digital technology is a deflationary force in an inflationary economy. Businesses – small and large – can improve productivity and the affordability of their products and services by building tech intensity.” - Satya Nadella, chairman and CEO of Microsoft.
Final Thoughts: Microsoft is an important stock for investors and an important company for the economy. The stock price might be overvalued, but it has proven itself worthy of greatness.
Investors Shrug Off Supply Chain Challenges
There’s no question that the world is dealing with supply chain challenges, but most retail investors seem to remain confident in the stock market.
High Demand: Most corporations are saying that despite the issues with the supply chain, consumer demand is still strong, which could keep stocks afloat.
Quote: “The market has mostly looked past the supply chain issues because of how well companies have been navigating this difficult environment so far and because, at least for now, those issues appear to be manageable or non-material over the long term in most cases.” - Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in the Economic Times.
Numbers: The market is still strong. The S&P 500 (SPX) and the Dow Jones Industrial Average (DJIA) are up 2% in the past month.
Buying the Dip: Many big-name individual stocks are down over the past two months. There’s a growing sense that investors could come in and buy the dip. This is especially true with certain technology stocks.
Final Thoughts: The supply chain challenges could hurt the economy, but many investors aren’t concerned - yet.
Trends to Watch
Not Good in the Hood: Robinhood shares tank as revenue falls way short of expectations on lighter crypto trading (CNBC)
It’s Everywhere You Want to Be: Visa tops earnings expectations, boosts dividend (MarketWatch)
Another One: ETF Issuer Direxion Files for Short Bitcoin Futures Product (Coin Desk)
Evolving Strategies: Swapping GameStop for ETFs, Retail Investors Ride Out Volatile Markets (The Wall Street Journal)
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