U.S. stocks rallied on Friday, with the Dow Jones Industrial Average rising over 150 points. Skechers U.S.A. (SKX) led the gains, with shares surging 16% after the company reported better-than-expected first-quarter earnings. Other notable gainers included Universal Logistics Holdings (ULH), Exponent (EXPO), Snap (SNAP), Tutor Perini Corporation (TPC), and U.S. Silica Holdings (SLCA).
Meta Platforms, the parent company of Facebook, reported strong first quarter earnings that surpassed market expectations. However, its shares plunged 15% in after-hours trading due to weaker-than-expected revenue guidance and increased spending on artificial intelligence (AI). The company’s revenue came in at $36.46 billion, representing a 27% increase year-over-year, while its earnings per share were $4.71, beating estimates. Meta’s advertising revenue remained a primary driver for sales, growing 27% to $35.64 billion. However, its Metaverse division, Reality Labs, continued to operate at a loss of $3.85 billion. For the second quarter, Meta provided weaker-than-anticipated revenue guidance, with an expected range between $36.5 and $39 billion, falling short of analysts’ forecasts. The company plans to increase its spending on AI projects and data center infrastructure, with its full-year 2024 capital expenditures estimated to be in the range of $35 billion to $40 billion. Meta’s CEO, Mark Zuckerberg, emphasized the company’s renewed focus on AI development and its ambition to compete with rivals like Microsoft and Alphabet in the AI race. The company’s recent launch of its Meta AI platform and its partnership with hardware companies for its AR headsets are seen as significant steps in this direction.
Members of NewJeans, the popular K-pop girl group, reportedly earned KRW5.2 billion (USD3.7 million) each in 2023, according to released ADOR documents. The collective payout of KRW26.1 billion (USD19 million) contributes to ADOR’s overall earnings of KRW110.3 billion (USD80 million) for the year. This growth has positioned ADOR as the third highest earning label under HYBE, following Big Hit Music and Pledis Entertainment. Despite an ongoing dispute between HYBE and ADOR, NewJeans is expected to release new music next month.
Equinor, the Norwegian oil and gas producer, has announced higher-than-expected profits for the first quarter of 2023, attributed to increased production in Norway and robust operational performance. The company’s adjusted earnings before tax fell to $7.53 billion from $11.92 billion a year earlier due to lower gas prices, but surpassed analyst estimates of $7.2 billion. CEO Anders Opedal highlighted the strong production on the Norwegian continental shelf and the solid growth from the international portfolio. Notably, Equinor became Europe’s largest supplier of natural gas in 2022, taking over from Russia’s Gazprom. With steady production levels of 2.16 million barrels of oil equivalent per day in Q1, the company maintains its forecast for flat oil and gas output in 2023 compared to 2022. In its annual review, Equinor projected a combined oil and gas production increase of approximately 5% by 2026, followed by a gradual decline towards 2030.
Northwest Bancshares’ (NWBI) Q1 2024 earnings report revealed a significant deterioration in profitability, primarily driven by rising interest expenses and a shift in deposits towards higher-cost time deposits. Despite a modest increase in net interest income, the bank’s net interest margin has continued to decline due to the faster pace of increase in interest expenses. Management’s decision to sell underperforming securities at a loss, while aimed at improving future profitability, will result in realized losses in the income statement. While the dividend remains sustainable for now, its long-term sustainability is questionable, given the need to distribute a large portion of earnings to shareholders and the potential for earnings to decline further in the current macroeconomic environment.
Microsoft (MSFT) is scheduled to release its fiscal Q3 ’24 financial results on April 25th, 2024, after market close. Analysts predict $2.82 in EPS, $26.2 billion in operating income, and $60.8 billion in revenue, reflecting growth of 15%, 17%, and 15% year-over-year, respectively. Microsoft’s valuation remains a concern, with its current trading value at 30x expected ’24 EPS. While Microsoft has historically exceeded analyst expectations, the recent performance of Meta and IBM suggests that the Street may hold Microsoft to a high standard in these earnings. The increasing impact of AI on Microsoft’s Azure segment is a key area of interest for investors. Overall, the market will be watching Microsoft’s results closely, with both potential upside and downside risks based on the company’s execution and guidance.
Meta Platforms delivered a strong first quarter, surpassing estimates for revenue, earnings, and cash flow. However, guidance concerns, including a conservative revenue outlook and increased capital expenditures, overshadowed the positive results, sending shares tumbling in after-hours trading. Despite the post-earnings sell-off, analysts maintain a bullish outlook, citing Meta’s dominance in targeted advertising and its potential to lead in artificial intelligence (AI) and other emerging technologies.
Meta, the parent company of Facebook and Instagram, declined to comment on the potential impact of a new law forcing TikTok’s Chinese parent company to divest its U.S. operations. CFO Susan Li stated that it is premature to discuss the implications of the legislation, signed into law by President Biden, which could lead to a ban on TikTok within nine months unless it complies. Meta’s silence on the matter stands out as the first major tech company to report earnings since the law was passed. Industry analysts predict a potential windfall for Meta if TikTok is banned, as Facebook’s Reels feature competes directly with the Chinese app. Meta’s recent earnings report showed mixed results, with revenue and profit beats offset by lower sales forecasts and increased spending on AI, which weighed on the stock price.
Ford Motor Company reported first-quarter earnings that exceeded analysts’ estimates, driven by robust commercial vehicle sales and increased hybrid vehicle demand. Despite a strong performance in its commercial division, Ford continues to face challenges in its electric vehicle (EV) business, recording a $1.3 billion operating loss for the quarter.
Meta’s stock dropped significantly in after-hours trading despite reporting strong financial results for the first quarter. The company exceeded analysts’ expectations with revenue growth of 30% and a doubling of profits. However, investors were concerned about the company’s outlook for the next quarter, which predicted lower revenues than analysts had anticipated. Despite the recent drop, Meta’s stock has performed well over the past year, doubling in value.
