Wednesday's Headlines: Apple’s Bringing Some Manufacturing Home
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Yext (YEXT) +4.1%
Core & Main (CNM) +3.5%
Axos Financial (AX) +1.9%
Trip.com Group (TCOM) +1.3%
Moving Down ⬇️
Redfin (RDFN) -9.6%
Roku Inc. (ROKU) -9.3%
Stitch Fix (SFIX) -8.9%
Farfetch (FTCH) -7.4%
Bumble (BMBL) -6.9%
Apple’s Bringing Some Manufacturing Home 🍎
In a sigh of relief for Apple (AAPL) shareholders wary of the company’s overexposure in Taiwan and China, the largest technology company in the world announced its intention to buy U.S.-made microchips.
At an event in Arizona attended by President Biden, Apple CEO Tim Cook said the iPhone maker will buy processors from a new factory in the Grand Canyon State operated by Taiwan Semiconductor Manufacturing Company. TSMC produces the world’s most advanced processors and is already one of Apple’s most significant collaborators.
The new facility will manufacture the 4-nanometer and 3-nanometer chips required for Apple’s A-series and M-series and Nvidia’s graphics processors.
“Today is only the beginning. Today we’re combining TSMC’s expertise with the unrivaled ingenuity of American workers. We are investing in a stronger brighter future, we are planting our seed in the Arizona desert. And at Apple, we are proud to help nurture its growth.”
TSMC’s new facility will receive financial support from the federal government under the CHIPS and Science Act. The program, which was a cornerstone of Biden’s legislative agenda, hopes to bring manufacturing jobs back to the United States while alleviating fears of supply chain concentration in Taiwan.
By 2026, TSMC hopes to have two plants in Arizona that will produce 600,000 wafers per year, enough to meet full U.S. demand.
Meta’s Ad Model Comes Under Threat from EU Ⓜ️
Meta (META), the parent company of Facebook, has come under fire from the EU regarding its targeted ad model. Regulators have ruled that the company shouldn’t require users to agree to personalized ads based on their online activity within its own platforms. They have decided that EU privacy law does not allow platforms like Facebook or Instagram to use their terms of service as a way to require users to sign up for this kind of advertising.
The ruling doled out on Monday has the potential to limit Meta’s ability to sell this kind of data on to advertisers. While Meta has long given the option to its users to opt out of tracking outside of its own family of apps, it has always required that they be tracked when using one of its own products. The company can then create a profile based on a user’s activity, making it more valuable for advertisers to target them with personalized ads. If Meta is no longer able to do this, we could see a severe disruption to its ad model.
The decision is not enforceable, but rather a directive for Ireland’s Data Protection Commission — where Meta’s EU HQ is based — to issue such an order that would reflect the ruling. Meta can appeal both, with this ruling likely being tied up in courts for an extended period of time. However, if it is upheld, it could prove devastating.
Shares of Meta fell 7% yesterday on the news.
Shares of MongoDB Soar on Upbeat Forecast 📈
Shares of MongoDB are up 27% in pre-market trading after the company posted a surprising profit and raised its forecast for the year.
Revenue for the quarter ended was $333 million versus $303 million expected. That led to adjusted earnings of 23 cent per share — far better than the 17 cent loss analyst had estimated. Revenue rose 47% year-over-year.
The cloud database company said it now had 39,100 customers with 63% of revenue now coming from its Atlas service.
Management says it expects revenue of about $1.26 billion for the 2023 fiscal year, up from previous guidance of about $1.2 billion. Adjusted net income should be between 29 cent to 31 cent per share, when a loss had previously been anticipated.
MongoDB is a powerful documents database that helps developers working across large data sets. Its rapid growth over the last few years saw shares more than triple throughout the pandemic.
However, as investors have turned away from high-growth technology stocks, the share price has seen a steep decline. Before the news last night, the stock was down 73% for the year. Last night's earnings call may come as some relief for technology investors who have seen widespread layoffs and guidance cuts across the sector in recent months.