Wednesday’s Headlines: Google Splits 20-for-1

Wednesday’s Headlines: Google Splits 20-for-1

Morning folks! Did anyone get yesterday’s anagram puzzle? The answer was Enterprise Value — that’s a tough one.

See if you can unjumble today’s mouthful — the clue's in today's headlines — and let us know on Twitter @MyWallStHQ if you think you’ve got it.

Potts slick

We’ll reveal the answer tomorrow. 

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

IMAX (IMAX) +7.7%

Upstart Holdings (UPST) +7.6%

DraftKings (DKNG) +7.2%

Netflix (NFLX) +7.0%

Lemonade (LMND) +6.9%

Moving Down ⬇️

Etsy (ETSY) -3.1%

Prologis Inc. (PLD) -2.1%

Nautilus (NLS) -2.0%

Take-Two Interactive (TTWO) -1.9%

Constellation Brands (STZ) -0.9%

1. It looks like another knockout quarter for Big Tech, with Alphabet (GOOG) beating on the top and bottom lines for Q4 2021. Earnings per share (EPS) soared past expectations to come in at $30.69 on record revenue of $75.33 billion — which amounts to 32% growth year-over-year (YoY) at a time of inflation-induced panic. What’s more, the company announced a whopping 20-for-1 stock split. This means that were the split to happen as of Tuesday’s close, the cost of each share would go from $2,752.88 to $137.64, and each existing holder would get 19 additional shares for every one they own. What’s important for investors to know here is that this in no way changes the intrinsic value of the business, and for a full explanation, be sure to sign up for today’s Fastball newsletter

2. It was a more mixed bag for payment leader PayPal (PYPL), which saw shares plummet after-hours. EPS came in short of expectations at $1.11, though revenue topped analyst estimates at $6.92 billion. The big stinger for investors came in the form of Q1 guidance, which is expected to see EPS come in at $0.87, short of the $1.16 expected. Shareholders need not fret though, as short-term analysis such as this is but noise to long-term buy and hold investors. PayPal, like the wider market right now, is merely suffering from inflation and pandemic-induced volatility and remains a top stock in our shortlist. To review our buy thesis for this stock, simply click the link at the start of this paragraph.

3. Away from the tech and onto the coffee, it was also a mixed report from Starbucks (SBUX) in Q4. The caffeine peddler’s investors were expecting a gloomier report though due to previously mentioned warnings of supply constraints and staff shortages, and somewhat welcomed EPS of $0.70 on estimate-topping revenue of $8.05 billion. It may not be calmer seas in 2022 though, with CEO Kevin Johnson stating on the company’s earnings call that he is anticipating higher inflation for the rest of the year, too. This is still a long-term play though, and as you can read in its official earnings report here, there is a multi-year plan for Starbucks to continue growing and boost margins. 

More earnings:

Match Group (MTCH) failed to impress its shareholders in Q4 though, despite total revenue growing 24% YoY to $806 million and paid users growing 15% to 16.2 million. Long-term investors can take heart in CEO Shar Dubey’s comments about Match’s planned global expansion in the coming years, which represents a lucrative opportunity in non-English speaking nations. Read the official press release here

There are 6 companies on the MyWallSt shortlist that will report earnings today:

Facebook (FB)
Align Technology (ALGN)
Spotify (SPOT)
Cognizant Technologies 9CTSH)
IDEXX Laboratories (IDXX)
The New York Times (NYT)

Get this week’s full earnings calendar here.