Thursday's Headlines: Meta Stock Craters Following Weak Forecast

Thursday's Headlines: Meta Stock Craters Following Weak Forecast

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Huazhu Hotels Group (HTHT) +13.2%

Trip.com Group (TCOM) +6.6%

Redfin (RDFN) +4.3%

Baozun (BZUN) +4.3%

2U (TWOU) +3.6%

Moving Down ⬇️

Spotify (SPOT) -13.0%

Google (GOOG) -9.6%

Datadog (DDOG) -8.2%

Microsoft (MSFT) -7.7%

Chipotle Mexican Grill (CMG) -6.8%
 

Here are the stories that you need to know ahead of market-open today, Thursday the 27th of October.
 

Meta Stock Craters Following Weak Forecast ☄️

Meta (META) stock is down close to 20% premarket this morning following its tumultuous third-quarter earnings call last night. A significant miss on earnings coupled with a muted forecast for the upcoming quarter conspired to send shareholders running for the hills as Zuckerberg and co. continue to grapple with a sliding stock price.

Meta reported earnings per share of $1.64 versus an expected $1.89 — quite the miss for the big-tech firm. Revenue of $27.7 billion just about managed to outpace the analyst estimate of $27.4 billion, but this simply wasn’t enough to sate investors' appetites for some good news.

With companies such as Snap and Google’s parent company Alphabet having already fallen afoul of slowing ad spend, Meta was always likely to be the next domino to go. Add to this the rise of TikTok as an alternative to Instagram and the devastation still being caused by Apple’s now infamous privacy updates and you have a recipe for disaster for Meta.

Meta is also focusing on developing the Metaverse, a strategy which earlier this week drew the ire of a notable activist investor in a scathing open letter to the company. Reality Labs, the arm of the company specializing in this Metaverse push, saw its losses widen to $3.67 billion — up from a mark of $2.63 billion in the year-ago quarter. And the company’s comments on this didn’t exactly inspire confidence:

“We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year.

Meta is currently down over 61% year-to-date before this impending slump, and is rapidly losing the confidence of investors across the globe. This might be somewhat unfair, given the current macroeconomic state and the looming threat of recession casting a shadow across even the strongest of tech companies. However, with such a pointed focus on developing a novel but risky technology in the Metaverse, Meta will have to show shareholders more results to continue to warrant confidence.
 

AI Investments Hurt Ford 🚙

Shares of Ford (F) are trading down before market-open this morning after the iconic automaker forecast a subdued quarter ahead.

Reporting on its third-quarter performance last night, the Detroit-based company posted a hefty net loss of $827 million. Adjusted earnings came in at $1.8 billion, which is down a whopping 40% from the same time last year, but came in slightly above its own previously announced expectations.

Revenue, on the other hand, came in at $37.2 billion for its automotive division, which was above the $36.25 billion estimated.

Supply chain issues and parts shortages continue to be a major impediment for Ford, with the company estimating that 40,000 to 50,000 vehicles were affected during the quarter, as well as an extra $1 billion in unexpected supplier costs.

The company’s investment in Argo AI — an autonomous driving technology company — also weighed heavily on the quarter, with a $2.7 billion non-cash, pretax charge being recorded. Speaking about this, CFO John Lawler said that the company was winding down operations on advanced driver-assist programs because “it’s become very clear that profitable, fully autonomous vehicles at scale are still a long way off.”

Finally, some sad news for first-time drivers across the world as Ford announced that it will be ending production of the Fiesta in 2023 after 47 years. This forms part of the company’s new strategy to go fully electric by the end of the decade.
 

Teladoc Soars on Narrower Than Expected Loss 🩻

Shares of Teladoc are up more than 9% in premarket trading after last night’s earnings call. The beleaguered telemedicine specialist posted a loss narrower than expected while slightly outperforming on revenue. Investors will also be happy to see the back of the goodwill impairment charges that have plagued the stock in 2022.

The company posted a net loss of $74 million, well below analyst expectations of $84 million. Revenue for the quarter was up 17% year-over-year to $611 million, while adjusted EBITDA came in at $51 million. The company also reported operating cash flow of $63 million, taking its total in 2022 so far to $124 million. This is a stark contrast to the company’s net loss for the year which is approaching $10 billion thanks to the aforementioned goodwill impairment charges.

For the final quarter of the year, management expects revenue to fall between $625 and $640 million, adjusted EBITDA of $88 - $98 million, and a net loss per share of $0.40 - $0.10. Today’s boost will be a welcome sight to the company and investors alike after a torrid year in which the stock has fallen more than 70% before the market opens today.

CEO Jason Gorevic had this to say:

“Teladoc Health delivered strong third-quarter results, including robust revenue growth, and adjusted EBITDA above the high end of expectations. During the quarter we continued to make progress against our whole person care strategy as the market evolves towards integrated virtual and digital health solutions.”

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