Friday Four Play: The “Go FAAA” Edition
Come in here, dear boy, have a cigar. You’re gonna go FAAA!
Big Tech is gonna fly high — it’s never gonna die. You can invest in it if you try. They’re gonna love you…
FAAA? What’s this FAAA you speak of, Mr. Great Stuff?
Well, aside from being a long, long way to run, FAAA stands for: Facebook Inc. (Nasdaq: FB), Alphabet Inc. (Nasdaq: GOOG), Amazon.com Inc. (Nasdaq: AMZN) and Apple Inc. (Nasdaq: AAPL).
Now, I’ve always had a deep respect for Big Tech, and I mean that most sincere. Tech is just fantastic, that is really what I think.
Oh, by the way, where’s Netflix?
Netflix is Sir-Not-Appearing-In-This-Film, since it already released its quarterly report this earnings season.
If you don’t already know the name of the game, dear reader, Big Tech calls it “riding the gravy train.”
And get this…
Big Tech just knocked out earnings a day after telling Congress that it really isn’t that big. Nope, no monopolies here. No anti-competitive behavior, just sweet, sweet profits! (You can take that as honesty or sarcasm. It doesn’t matter; they’re both correct.)
Who would’ve thought that the companies centered around mobile business, at-home shopping and staying in touch with people worldwide would do so well during a pandemic? It’s almost like they were made for this.
Before we get to the FAAA-ing earnings details, I have an opportunity for you! (Of course, I do. What else did you expect?)
It’s one tiny company at the forefront of nearly every tech gravy train you can think of.
Everybody else is just green. Have you seen the chart? It’s a hell of a start — it could be made into a monster — smack dab in the center of an energy market set to grow a $250 billion niche into a $51 TRILLION industry.
We’re so happy we can hardly count! You owe it to the people to check this one out.
And now for something completely different … it’s time for your Friday Four Play.
No. 1: Tim the Enchanter
Tim Apple — aka Tim Cook, aka Tim the Enchanter, aka the CEO of Apple — may be a complete bore when compared to Steve Jobs, but he can certainly get the job done.
Apple may be the most boring Big Tech company in FAAA, but what it does, it does well.
And the proof is in the earnings. Despite the lack of “one more thing…” levels of excitement, a pandemic and a growing global disinterest in new smartphones, Apple handily beat Wall Street’s fiscal third-quarter earnings expectations.
iPhone sales rose 2%. iPad and Mac sales rose 22% and 31%, respectively. Services revenue jumped 15%. All in all, Apple’s total revenue for the quarter rose 13.4% to $59.7 billion, beating the Street’s target. Earnings spiked 25.9% to $2.58 per share, blowing past expectations for $2.05 per share.
But wait! There’s one more thing … and it isn’t a new iPod.
Apple also announced a 4-for-1 stock split, taking place in August. Can you imagine how many Robinhoodlums are dying to snap up AAPL for around $100 per share post-split? It’s gonna be huuuge.
No. 2: Great Googly Moogly
Can we finally stop calling Alphabet a “serious contender” for, well … anything?
All the other FAAA companies saw revenue and earnings rise, and here’s Alphabet with a 2% year-over-year decline in revenue. Sure, it still made $38.3 billion in sales, but how does a company that specializes in internet searches shed sales during a pandemic lockdown?
Google’s audience is even more captive than it was before COVID-19. YouTube should be going gangbusters on ad revenue. It’s America’s most-watched video streaming service. Google Cloud services should be the envy of the cloud market.
But Google just can’t seem to get its act together.
That’s it. I’m stripping Apple’s “Most Boring Tech Company” title and giving it to Alphabet. The company has been riding search ad revenue for so long, it forgot how to launch and support a real product.
I mean, earnings fell 30% to $10.13 per share. Where’s the leverage, Google? Where’s the innovation? All those side projects and nothing to show for it.
Mark my words: Someday, another company will invent a better internet search engine.
It’s clearly not an easy task, or someone else would’ve done it by now. However, it’ll happen. And when it does, Google and parent company Alphabet are going down. (Or it’ll just buy the competition again.)
No. 3: 27? In a Row?
You can get everything you want at Amazon’s restaurant … walk right in, it’s around the back. At least, until it goes out of stock.
They took 27 8-by-10 colored glossy photographs … with circles and arrows and a paragraph on the back of each one explainin’ what each one was, to be used as evidence against us.
I’m so lost … Amazon? Crime scenes? What’s up in the Bezos bungalow?
See, Amazon started the trading day in new all-time high territory, pumped up from 27 straight analyst upgrades.
The crowd went wild! After the quarterly data dropped, 27 analysts were on their feet, with their price targets held high!
AMZN to $4,000! No, it’s headed to $4,075!
On average, the consensus expects AMZN to edge up just a tad higher to $3,464.25, but who’s counting?
The Amazon fawning didn’t come out of nowhere. Believe it or not, for the quarter in which people ordered everything from sweatpants to Kraft Mac online … Amazon stole every other retailer’s lunch, despite shipping delays and supply outages. (I drink your milkshake! I drink it up!)
Amazon’s quarterly results came in above expectations on virtually every front. Revenue? Up to $88.91 billion, topping the estimate for $81.56 billion. Earnings? That’s another blowout! Earnings per share came in at $10.30, crushing estimates for just $1.46.
And it’s not just the Charmin Ultra front lines that saw an Amazon-sized bump.
Amazon Web Services — the online cloud service so crucial to many companies’ remote work — saw a huge revenue jump, rising 29% year over year. Feel free to join me in pointing and laughing at Google Cloud.
And we haven’t even talked about the captive audience tuning in to watch Amazon Prime…
If you’re not invested in Amazon already, you can do better than to get in at all-time highs. Wait for a pullback before you venture into the jungle.
No. 4: Can’t Shuck the Zuck
Everybody’s boycotting Facebook, but Facebook don’t care. Congress even tried to stick its knife in Facebook’s antitrust-worthy back. But did Zuckerberg blink?
Nope. (Has anyone checked if he can blink?)
I know you were shocked when we broke the news that Amazon went double-live GONZO in the pandemic-marred quarter.
Get this: People couldn’t get enough of Facebook, Instagram and WhatsApp either.
I’m shook. Shocked straight to my core.
Across its platforms and apps, Facebook saw its user count jump to 3.14 billion after it barely broke the 3-billion-user mark last quarter with 2.99 billion. That’s a whole lot of memes, dreams and tinfoil-hattery.
The only problem is that, even as the user count rises, Facebook isn’t bringing in a corresponding amount of ad revenue. You know … that whole “advertising boycott” we just mentioned. Everyone from Coca-Cola and Starbucks to Volkswagen pulled ad spending, while others severely pared down their ad campaigns.
But do FB’s earnings and investors care? No, not so much. Revenue rolled in at $18.7 billion versus the $17.4 billion estimate. Earnings stayed lofty at $1.80 per share, compared to analysts’ $1.39-per-share estimates.
It’s the social media giant’s slowest growth since it came public in 2012 … but it’s growth. I’m looking at you, Google.
Even Facebook’s back cupboard of “other” projects saw some traction, up 40% year over year. This includes the Portal video chat devices to communicate across the locked-down world, and the Oculus virtual reality headset to leave this world behind altogether.
After Google’s incessant fascination with side projects (and then murdering its darlings), that’ll do, pig. That will do.
Great Stuff: Wish You Were Here
Thanks for joining us for another week of Great Stuff. It’s Friday — give yourself a pat on the back. You made it, bucko! Thanks for riding the gravy train with us.
Now, let me ask you this: Do you think you can tell? Heaven from Hell? Great Stuff from pain?
Can you tell … an empty inbox, in need of your name? We’re just two great souls, swimming in a fishbowl, so why not write to us?
How I wish … how I wish you were here. In our inbox, of course. My house isn’t big enough for all of us, especially with social distancing and all.
GreatStuffToday@banyanhill.com is where the greatness lives on, and where your email to us can shine on.
We’d love to yap with you about all things markets, Big Tech and Pink Floyd. (You pick which one!)
We’ll keep an eye on future greatness in the meantime, and you can always check us out on Facebook, Instagram and Twitter.
Until next time, stay Great!
Joseph Hargett
Editor, Great Stuff