Friday Feedback: The “Why Can’t I Hold All These Earnings” Edition
Earnings, earnings everywhere … and more than a few drops to drink.
Yes, it’s Friday Feedback, but I’d be remiss if I didn’t alert you to some rather big earnings news today. And we’re talking really big, so let’s get to it, Great Ones.
Snap & Pinterest Rally On News They Aren’t Facebook
That says it all, right there.
Apparently, ad sales and user growth aren’t quite so bad for everyone not named “Facebook,” as Snap saw increased ad spending and a 20% rise in daily active users.
Now, I don’t understand Snapchat. You probably don’t understand Snapchat. But that doesn’t matter.
The important thing to know is that Snap has managed to find a way to both be a social media company and not be evil.
Kudos to you, Snap.
And if you wanted more proof that “It isn’t me, it’s you, Facebook!” then look no further than Pinterest (NYSE: PINS).
Now, Pinterest did say that daily active users fell about 6%, but that didn’t matter all that much for PINS investors. Ad sales growth helped push revenue 20% higher to $846.7 million, topping Wall Street’s forecasts. What’s more, earnings also topped analyst forecasts.
But the icing on the cake for Pinterest was this little gem from the company’s earnings conference call: “Apple’s privacy changes did not have material impact on Pinterest’s sales.”
You see, Facebook likes to blame Apple’s new privacy policies for its failures. All I have to say to that is that if you can’t make money without respecting your users’ privacy, you’re gonna have a bad time. Both Snap and Pinterest figured it out … and at this point, it might be too late for Facebook.
PINS stock was up roughly 7% in early trading.
One ‘Zon To Rule Them All
If you need proof that Amazon.com (Nasdaq: AMZN) is the king of retail — what rock are you living under?
Amazon just reported earnings of $27.75 per share on revenue of $137.4 billion, blowing away analyst expectations.
A couple of highlights include a 40% surge in Amazon Web Services (AWS) revenue, a $12 billion gain from Amazon’s investment in Rivian (Nasdaq: RIVN) and $1.3 billion in stock repurchased during January.
Additionally, Amazon announced it’s raising the price on Prime subscriptions for the first time in four years. Looks like that NFL Thursday Night Football license didn’t come cheap.
Anywho, AMZN stock bounced more than 12% on the news and should remain a solid investment for some time to come.
Press “F” For Ford
Not everything was roses this morning, though. Some of it was ovals … blue ovals at that.
It’s hard to imagine a worse quarterly report for Ford Motor (NYSE: F). Earnings missed expectations. Revenue missed expectations. Vehicle deliveries missed expectations. Guidance … you guessed it … missed expectations.
And, of course, Ford blamed supply chain issues across the board. CFO John Lawler said that these issues will ease in 2022 but that commodity costs would be higher by $1.5 billion to $2 billion. It seems Ford can’t win for losing at this point.
All I can say is that Ford better show some success with its electric vehicle (EV) program soon. Wall Street’s patience for growth without results is wearing thin pretty fast.
Editor’s Note: This Tech Is Mission-Critical For Mass EV Adoption
The No. 1 problem preventing the mass adoption of EVs is cost. But thanks to this brand-new battery tech, EV affordability might be just around the corner.
See, this stunning new technology is about to cut the cost of EV batteries IN HALF … meaning by next year, EVs are expected to cost as much as gas-powered cars.
Mark my words: Demand will go through the roof thanks to this new tech. And it’s going to create what could become the biggest investment opportunity of the century.
But, I’ll always make time for you, Great Ones, so let’s ditch today’s news for now and zero in on your stock market questions and rants. It is Friday Feedback, after all!
What? You haven’t heard of Friday Feedback? It’s OK. Nobody’s perfect.
So, Friday Feedback is the day we here at Great Stuff rifle through our email inbox to tackle your investing, stock market and various other questions … in the way that only Great Stuff can. That is to say, with memes and sarcasm. I hear there’s some useful info in there too.
To join the fun, all you have to do is email us at GreatStuffToday@BanyanHill.com. And don’t worry, we don’t bite — that costs extra. Now, to the emails!
You Can Call Me Al
A quote from today’s (3 Feb 22) Great Stuff email: “…far short of the $30.15 billion analysts expected.”
Who are these “analysts”? Who do they work for? How many? If a bunch of them, how do they agree on one number? How are their expectations reported? How do they come up with these expectation? Who watches them?
Seems to me these analysts are an important part of the equation. If companies grossly miss or grossly exceed these expectation, stocks can go wild. — Al P.
Thanks for writing in, Al!
If you’ll be my bodyguard, I can be your long-lost pal. Can I call you Betty? Never mind.
I see you’re not that far from my Hobbit hole in Northern Kentucky. I hope you’re weathering this ice storm OK. We got like three to four inches of straight-up ice here, man. This ain’t the “winter wonderland” I signed up for.
Anyway … analysts, right?
So, when I or anyone else talks about analyst expectations, we’re talking about the average across the board. These analysts work at places like Goldman Sachs, Citibank, JPMorgan, Credit Suisse, Piper Sandler … the list goes on.
Their entire job is to analyze company revenue flows, expenses, market conditions, growth forecasts, etc., and they typically have exclusive access to insider corporate information to help them project and set their own expectations.
There are literally thousands of analysts working for hundreds of different companies, and they definitely don’t agree on one number. Peons like yours truly average those expectations into a middle number.
Take Ford, for instance. The current price target range for Ford stock goes as low as $11 and as high as $30, and there are 22 analysts currently offering up an opinion on Ford’s stock price.
When I talk about analysts and Ford’s stock price, I don’t give the range, I focus on the middle of the range, which is about $21.59. Some analysts think Ford is underpriced right now. Others think it’s still overpriced. This is why we look at the average.
Nobody watches these analysts for accuracy, per se. Still, they are beholden to certain SEC rules and regulations for fairness and accuracy, in as much as there is any fairness and accuracy in making future predictions.
Finally, analysts release their predictions and target figures in press releases, in paid services and in financial news stories and interviews. Then places like Yahoo Finance collect that data and average it out.
The bottom line here, Al, is that the analyst business is a bit of a racket. But their targets are a very important part of the stock market equation. Sometimes, however, these ratings and targets don’t consider how the real economy is running.
I know, it’s shocking … Wall Street can be out of touch with Main Street?
It sure can be. And in my opinion, the pandemic, inflation and the Great Resignation have most of today’s analysts completely flummoxed … which is why we’re seeing so much volatility this earnings season.
I hope that helps, Al! Thanks for writing in, and stay safe, my fellow Kentuckian!
Just wanted to rant a little about all this virtual reality stuff.
I can see a lot of potential in visiting far off places, museums and landmarks using VR. I meet even pay some real cash for the price of “admission”.
I don’t see a lot of potential in recreating spaces like Walmart or the supermarket so you can shop the aisles virtually. I can already place an order and pick things up in my car without even going into the store. The store itself is the annoying part of shopping.
Wouldn’t there be an unlimited amount of real estate available in the meta verse, why is it so expensive. So my avatar can wave to Snoop Dogs avatar when he comes to check it his NFTs. I just don’t get the point of paying premium bucks for that.
Love your ezine. Keep up the Great Stuff. — Dave H.
Finally! Someone gets it!
Dave, are you in my head?
This is exactly my problem with all this virtual reality stuff … this metaverse mess.
The unique experiences like visiting landmarks, museums, potentially other planets — those are the things I would pay real cash for the price of admission. Not Walmart stores … or proximity to Snoop Dogg’s NFTs.
And, yes, there is technically an unlimited amount of virtual real estate.
As long as you have the space on your data center, the number of virtual real estate “plots” is conceivably unlimited. Kinda breaks that supply/demand thing we were taught in Econ 101, right?
You and I both know there is value in the metaverse. There might even be value in metaverse real estate, eventually. But that time is not now.
Now? We’re looking at an early-stage cash grab by “industrious” entrepreneurs — i.e., people smart enough to create metaverse NFTs and houses and sneakers, and smart enough to know people will pay obscene amounts of money for them.
This is all very similar to the early 2000s when anything with a “.com” behind it sold for ridiculous amounts of cash. And we all know how that turned out.
That said, just like the dot-com era, the current metaverse madness will eventually resolve itself into something that will be worth real money and be worth investing in. Which is why, right now, Great Ones should invest in the companies that are helping to build the metaverse and NFT platforms … not the ones selling virtual plots of land or sneakers.
I’m talking about the Nvidias, AMDs, Microsofts of the metaverse … not the Nikes or the Walmarts … or the guys making NFT monkey images. WTF was all that about anyway?
Thank you for getting it and for writing in, Dave — and for letting me rant once again on the metaverse.
Is That A Laser Rocket In Your Pocket? Or…
Got Junk Nomore
takes a rocket with a lazer and blast the junk and a trailing net collects the junk and when the removal is paid for jetisens the net of junk into space
probably using robots in case the junk has to be taken out in space by the rocket.
thanks for your consideration
— John M., striving to clear the space in space.
Out of all the business proposals … all the off-the-wall ideas we get sent every week … this is the one that I’m actually interested in.
(Seriously, cool it with the stainless-steel caster wheel offer emails. I didn’t want them two years ago, and I still don’t need them.)
So let me get this straight: To solve the coming space junk crisis (phrasing?), you want to blow up the debris into smaller debris and then shoot that space debris deeper into the void, like galactic-scale NIMBY-ism?
Sounds like an impeccable idea — let’s get Elon on the horn right meow. Just don’t ask me to do the robo-rocket math to figure it all out…
I mean, how small can you make the holes on a space net anyway?
I’ll take “Questions I never thought I’d ask” for $600, Mr. Great Stuff.
My favorite part of your email, John? Being thanked for considering a business I have no inclination or means to create. Thanks instead for your consideration, John. And thanks for writing in again!
Until Great Stuff is ready to recommend the next greatest rocket-laser-robot-net stock … do yourself a favor: Check out what space stocks are here right now.
When it comes to space stocks, Paul is all over it. He just released a new video briefing outlining his expectations for the entire sector.
Not only that … he wrote two detailed reports with names, tickers and predictions for all his favorite space companies. Click here for the full details!
And after you’ve checked that out, it’s time we turn it over to you in the inbox. If you have any stock market questions, investing rants or stocks you want covered in the hallowed halls of Great Stuff, email us at GreatStuffToday@BanyanHill.com.
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Editor, Great Stuff