Friday's Headlines: Apple Beats Revenue and Earnings Estimates
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Etsy (ETSY) +9.9%
Align Technology (ALGN) +7.5%
Bumble (BMBL) +7.5%
iRobot (IRBT) +6.4%
Ford Motor Company (F) +6.1%
Moving Down ⬇️
Teladoc (TDOC) -17.7%
Baozun (BZUN) -6.0%
Meta (META) -5.2%
Zillow (Z) -3.0%
Here are the stories that you need to know ahead of market-open today, Friday the 29th of July.
Apple Beats Revenue and Earnings Estimates 👨💻
Shares of Apple (AAPL) have gained almost 3% in pre-market trading as the tech giant announced its fiscal third quarter results after market close on Thursday. Apple reported revenue of $82.96 billion and adjusted earnings of $1.20 per share in Q3. Comparatively, analysts forecast the company to report revenue of $82.81 billion and adjusted earnings of $1.16 per share in the June quarter.
During the earnings call, CEO Tim Cook confirmed Apple continues to wrestle with a “cocktail of headwinds,” which impacted its revenue and earnings in the last two quarters. Prior to the recent uptick, Apple stock was down 11% year-to-date due to a challenging macroeconomic environment.
Earlier this year, Apple warned investors supply chain disruptions might drive sales lower between $4 billion and $8 billion in Q3. However, Cook confirmed the impact of these constraints was lower than $4 billion, allowing Apple to post better than expected numbers in Q3.
While business segments such as the iPhone and iPad outpaced estimates, the MacBook, Services, and wearables business underperformed compared to Wall Street projections.
The iPhone continued to drive sales in Q3, accounting for almost 50% of total revenue at $40.7 billion. Services was Apple’s fastest growing business as sales surged 12% year-over-year to $19.6 billion, falling marginally short of estimates of $19.7 billion. Comparatively, wearables sales stood at $8.08 billion for the quarter, almost 10% lower than estimates.
While Apple beat consensus estimates in the quarter, Tim Cook remains wary of lower consumer spending and rising commodity prices, which will likely hurt the company in the near term.
Amazon Beats Expectations and Heads Higher 📈
Despite labor challenges, inflation, and growing regulatory pressure, Amazon (AMZN) beat revenue expectations in Q2 and lifted its full-year guidance. This sent the stock up more than 13% in pre-market trading.
With much of big tech suffering, Amazon is the rare exception. Overall revenue increased 7% year-over-year reaching $121.23 billion and it saw strong growth in many of its key verticals. Sales in Amazon’s cloud segment jumped 33% from last year, bringing in $19.74 billion, $18 million more than analysts estimates. The Big Five company also saw advertiser revenue grow by 18%, an especially surprising figure considering Meta’s advertising difficulty during the same period.
However, Amazon’s core e-commerce business did see revenue decline by 4% but this can likely be chalked up to tough year-over-year comps. The company’s physical stores, which are still in recovery mode, generated 12% revenue growth.
The internet conglomerate also decreased its headcount by 99,000 people to 1.52 million employees. This would appear to be a correction after Amazon more than doubled its staff during the pandemic. According to management, hiring plans are being re-evaluated and will be more measured moving forward.
Earnings per share came in at a loss of $0.20 but this isn’t the best metric with which to measure Amazon. The company owns a commanding stake of the electric vehicle maker Rivian which this quarter saw its shares plunge more than 49%. Consequently, Amazon recorded a $3.9 billion loss, creating an overall loss of $2 billion in the quarter. This circumstance is a rarity and one the company is unlikely to repeat.
Roku Plunges on Earnings and Revenue Miss 😰
Roku (ROKU), too, announced its Q2 results after the market close yesterday. It reported revenue of $764 million and an adjusted loss of $0.82 per share. Comparatively, Wall Street forecast Roku sales at $805.2 million while adjusted losses were estimated at $0.68 per share. Roku’s massive earnings and revenue miss is driving the stock significantly lower. At the time of writing, Roku shares have slumped by 25% in pre-market trading.
The streaming player also disappointed investors with its Q3 revenue forecast of $700 million. Analysts expected Roku’s revenue at $901.73 million in the third quarter.
Roku has been among the worst-performing stocks in 2022. Before the sell-off today, the stock was already trading 80% below all-time highs, wiping off significant investor wealth in the process.
Founded in 2002, Roku devices enable customers to streamline their setup and replace cable equipment, accelerating the cord-cutting phenomenon. Its Platform business allows users to access online content, and it ended 2021 with 60.1 million active accounts. Roku’s Player business provides digital and video advertising, content distribution, as well as brand sponsorships, and promotional services to clients.
The COVID-19 pandemic acted as a tailwind for Roku shares as the stock more than tripled between January 2020 and July 2021. But the reopening of economies and a harsh economic environment resulted in a steep deceleration of revenue growth.
Due to this lack of visibility, Roku withdrew its full-year guidance for 2022.