Reacting To Earnings From Apple, Amazon, Facebook, Alphabet, and Twitter

By: Spencer Israel

Thursday was perhaps the biggest day for corporate earnings in recent memory, with four of the five largest companies in the U.S. (and Twitter) all reporting earnings for the September quarter within a half hour. Here’s how it shook out. 

Apple- Weak In China
Earnings per share (EPS): $0.73 vs. $0.70 estimate
Sales: $64.7 billion vs. $63.7 billion estimate

Segment revenue:
iPhone revenue: $26.44 billion vs. $27.93 billion estimate
Services revenue: $14.55 billion vs. $14.08 billion estimate
Other Products revenue: $7.88 billion vs. $7.40 billion estimate
Mac revenue: $9.0 billion vs. $7.93 billion estimate
iPad revenue: $6.8 billion vs. $6.12 billion estimate

The biggest headline from Apple’s report was a 29% year-over-year decline in China sales. Most of Apple’s sales in China come from the iPhone, so the company expects to see a recovery when the new iPhone 12 goes on sale. The company also declined to give any forward-looking guidance. 

Stock Reaction
AAPL opened down 3.5% on Friday following a sharp decline in the after-hours session. The stock popped slightly higher at the open but has otherwise continued its downward trend on Friday.

Amazon- A Massive Quarter Despite Slowing AWS Growth
Earnings per share (EPS): $12.37 vs. $7.41 estimate 
Sales: $96.10 billion vs. $92.70 billion estimate

Guidance:
Q4 sales guidance: $112-$121 billion vs. $112.3 billion estimate

Amazon blew away the consensus estimates for sales and earnings last quarter, though sales growth from Amazon Web Services, the company’s primary revenue driver, declined slightly. AWS sales came in at $11.6 billion last quarter, in-line with estimates. The company also said they now have over 1 million employees worldwide.

Stock Reaction
After initially increasing over 3% in the after-hours session, AMZN opened down 1.7% from Thursday’s close. The stock has continued to trend downward during Friday trading.

Facebook- Increased Ad Spending, But Users Decline In The U.S.
Earnings per share (EPS): $2.71 vs. $1.91 estimate
Sales: $21.47 billion vs. $19.82 billion

Other Metrics:
Daily active users (DAUs): 1.82 billion vs. 1.79 billion estimate
Monthly active users (MAUs): 2.74 billion vs. 2.7 billion estimate

Average revenue per user (ARPU): $7.89 vs. $7.32 estimate

Facebook’s revenues were boosted by increased ad spending on the platform. But while its user base grew in most markets, it declined in the U.S, with DAUs falling from 256 million to 255 million domestically. They also said they said DAUs in North America will likely not grow in the current quarter. 

Stock Reaction
Shares of FB initially popped 6.5% Thursday afternoon, but by Friday at noon shares have declined that same amount from Thursday’s close.

Alphabet- Growth Across The Board
Earnings per share (EPS): $16.4 vs. $11.21 estimate
Sales: $46.17 billion vs. $42.88 billion estimate

The same rebound in ad spending that Facebook experienced also made its way to Google. Ad revenue exceeded $37 billion last quarter, up from $33.8 billion a year ago. YouTube, specifically, generated over $5 billion in advertising revenue for the first time, up from $3.8 billion a year ago. Google Cloud revenue also grew 45% on a year-over-year basis.

Stock Reaction
Shares of GOOG rallied over 10% in Thursday’s after-hours session, but the stock has given back some of its gains during Friday trading. 

Twitter- Slowing User Growth
Earnings per share (EPS): $0.04 vs. $0.06 estimate
Sales: $936 million vs. $777.15 million estimate
Average Daily Active Users: 187 million vs. 195 million estimate 

Twitter’s ad revenue also grew in-line with its peers, but it’s DAU growth left investors and analysts disappointed. CFO Ned Segal also warned of uncertain ad demand after the upcoming election.

Stock Reaction
Shares of TWTR initially popped 3% after the report, but the stock opened Friday’s session down 15%. The stock has continued to leak throughout the morning. 

The author is long the S&P 500 in his retirement accounts.

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