Hand Over The Drugs
It’s not quite time to re-book that vacation yet, but Gilead has reported success with trials of its remdesivir drug as humanity fights back against the pandemic.
What’s the timeline?
Gilead is no longer a dystopian state from a Margaret Atwood novel, but a beacon of hope in these dark times. While the White House is pulling out all the stops to give a COVID-19 vaccine to the public, Gilead may have found a way of aiding recovery. The big pharma company’s experimental remdesivir drug is believed to help patients recover more quickly from the infection. The FDA is currently in talks with Gilead and reports have emerged that it plans to announce an emergency-use authorization for remdesivir, potentially as soon as next week. The markets reacted to Wednesday’s news as one would expect: jumping nearly 3% across all major indices and making April the Dow’s best single-month performance since 1974. It is still early days on the trial, but at the very least one can assume that a few more weeks of successful testing will at least give world leaders some semblance of when an exit strategy for restrictions can take place.
Bet you didn’t know
Edward Jenner is considered the founder of vaccinology after inoculating a 13-year old boy with smallpox and thus making him immune, creating the smallpox vaccine in 1798.
While the rest of us mere mortals just try to get by, tech CEOs Elon Musk and Mark Zuckerberg are battling it out for the good of the people.
What have the CEOs got to say now?
Mark Zuckerberg has spent much of the past two years facing widespread vitriol about Facebook’s litany of privacy issues, while Elon Musk has bathed in the glorious idolization of his masses of Tesla fans who expect him to take them to the stars. However, the two CEOs are now facing their respective company’s biggest challenge in the form of a pandemic, and have taken polar opposite stances. Musk unleashed a tirade of tweets denouncing stay-at-home laws and labeled restrictions as ‘fascist’ in an expletive-laced rant during Tesla’s earnings call. Mr. Big Brother himself, Mark Zuckerberg appeared to take an opposite stance, talking of how he is concerned about the country opening up things too quickly, and wishes for his employees to be safe. Let’s state the obvious though: More people stuck at home means more people using Facebook. Musk’s Tesla, on the other hand, desperately needs its plants operating again. Is it possible that I’m beginning to believe that Zucks actually cares about us? Ok, now I know I’m going crazy...
Bet you didn’t know
Many people don’t know this, but Elon Musk didn’t actually found Tesla. It was founded by Martin Eberhard and Marc Tarpenning, although current CEO Elon Musk led the first investment round in February 2004
The realm of business is a vicious one, and to quote ‘Star Wars: The Phantom Menace’ character, Qui-Gon Jinn: “There’s always a bigger fish.”
Is Zoom under threat?
Shares in Zoom fell last weekend after Facebook revealed that it would be rolling out a suite of new products to expand its capabilities in video chat. The company’s ‘Messenger Rooms’ teleconferencing feature is completely free and allows a user to host up to 50 participants. It’s also doubling the capacity of video calls on WhatsApp from four people to eight, adding video calls to Facebook Dating, and adding new live-streaming features to both Facebook and Instagram. Zoom, which has become the darling (and villain) of Wall Street, has surged in popularity since pandemic lockdowns took effect. Jumping from 20 million to 300 million daily active users since January, Zoom is now the thin red line between those of us who are isolated and the encroaching madness driven by lack of access to the outside world. Facebook’s new features could take some users away, but Zoom’s privacy issues will certainly be offset by the sheer scale of distrust people have for Facebook. Sounds like an even trade
Bet you didn’t know
The debut of video-conference technology actually came all the way back in 1956, when AT&T started working on a “Picturephone” prototype capable of transmitting still images every two seconds over a regular analog public switched telephone network.
With almost 150 of the S&P’s 500 companies reporting Q1 earnings this week, we’ve got plenty to talk about.
On to the small matter of earnings…
Oral health company Align saw revenue drop 15% to $551 million in Q1. Shares in the company have recovered roughly 50% from its 2020 lows, and management is optimistic about business picking up in the important Chinese market.
The Google parent saw shares rise this week despite reporting a significant slowdown in ad sales due to the coronavirus. However, its Cloud and YouTube revenue helped bring the total to $6.84 billion, or $9.87 a share, showing the company was no longer so dependent on ad revenue.
Bezos & Co reported on a massive quarter last night, posting overall sales growth of 26% as customers flood to use its services during lockdown. However, CEO Jeff Bezos did warn investors to "take a seat" before announcing plans to spend all of the company's profits — estimated to be at least $4 billion — for the coming quarter on COVID-related expenses like increased worker pay and the purchases of protective gear.
American Tower reported an earnings success on Wednesday, with the company's bottom line totaling $415 million, or $0.93 per share, and revenue rising 9.9% to $1.99 billion. The company is expected to dodge the COVID-19 hit in 2020, as management emphasized the predictability of its business model.
Apple managed to surprise analysts by actually posting positive sales growth of 1% in the last quarter, up 1% year-on-year. It appears that sales of subscription services such as streaming television content helped to bolster the numbers, with the overall number of subscribers to paid apps and services on Apple's devices now sitting at 515 million.
Atlassian also reported a bit of a mixed bag after the bell last night, perhaps falling victim to increased expectations thanks to being one of the few stocks that may actually benefit from the stay-at-home orders.
Cognex reported a revenue decline of 4% to $65 million at Tuesday’s earnings call. The company expects the coronavirus impact to expand and accelerate into Q2, noting lower demand, supply chain disruption, and longer customer delivery times.
Despite the sting of the coronavirus, Facebook still reported first-quarter earnings of $4.9 billion, with users growing 10% to 2.6 billion. The company cautioned its business “has been impacted by the COVID-19 pandemic and, like all companies, we are facing a period of unprecedented uncertainty in our business outlook.”
Ford stock plummeted after it posted a $2 billion loss in Q1 and expects that to more than double in Q2. The company unveiled revenue severely hit by the COVID-19 pandemic, with $34.3 billion in sales and a per-share loss of $0.23.
Toymaker Hasbro swung to a net loss of $69.6 million, or $0.51 a share, in Q1, but ended the quarter with $1.2 billion in cash, with revolving credit of $1.7 million as protection against the COVID-19 downturn. The company said on Wednesday it expects its second quarter to take a hit from the coronavirus pandemic, but it expects to be ready for the holiday season.
Shares in iRobot dropped following an earnings report that saw revenue fall 19% during Q1. The Roomba maker reported an operating loss of $14.4 million, but gave encouraging guidance, stating that e-commerce sales had grown in recent weeks.
Mastercard topped earnings expectations on Wednesday after posting net income of $1.7 billion, or $1.68 a share on revenue of $4 billion. Not only that, but the company sees early signs of spending levels stabilizing, having fallen over 17% in the past 3 months.
Tech giant Microsoft reported revenue growth of 15% to $35.02 billion in Q1. The company said in a statement that the effects of COVID-19 may not be fully reflected in the financial results until future periods.
Payroll software maker Paycom saw revenue jump 5.56%, to $242.37 million. The company’s shares have lost about 14% since the beginning of the year compared to the S&P 500’s -11%.
ServiceNow earnings and revenue topped Wall Street's first-quarter estimates as the company managed to close big deals despite the coronavirus lockdown. The California-based company revealed EPS of $1.09 on sales of $1.04 billion, with subscription revenue jumping 34%.
Music streaming giant Spotify had a better-than-expected 31% jump in paid music subscribers to 130 million and a 22% rise in revenue in the first quarter. Amid growing competition from Apple Music, Spotify expects to bring in premium subscribers in the range of 133 million to 138 million in Q2.
Shares in Starbucks fell after it reported net income of $328.4 million, or $0.28 a share. However, the company did announce that it expects to reopen a significant number of stores worldwide in the coming weeks.
The surprise from earnings on Wednesday came from Teladoc, which missed on Q1 estimates with a loss per share of $0.40 on a net loss of $29.6 million. Teladoc has been thrust into the limelight because it specializes in video conferencing for the healthcare industry, and expects to earn $215 million to $225 million in revenue in Q2.
Tesla shares rose more than 9% after hours as the company revealed a profitable quarter of $16 million, with EPS of $1.24 on revenue of $5.99 billion. The company is relying heavily on its Shanghai factory while Fremont remains closed, but still expects to hit annual targets.
Twitter reported an earnings bear for Q1, with revenue of $808 million as well as a rise to 166 million monetizable users. Twitter did not provide guidance for the second quarter and is still suspending full-year guidance.
Bet you didn’t know
The name ‘Starbucks’ is derived from the name of Captain Ahab’s first mate in Herman Melville’s ‘Moby Dick’.
Is this the end of cinema as we know it? Could the Trolls have finally won? I’m not talking about internet trolls, I mean literal singing and dancing, big-eared, colorful trolls. With cinemas shut down all around the world due to the pandemic, movie studios have been forced to take matters into their own hands, such as offering rental schemes. Universal’s “Trolls World Tour” sequel has racked up nearly $100 million in rental fees in the last three weeks, which is more than the original made after 5 months in the cinema. This success has emboldened Universal to consider doing more digital releases in the future. However, it is unclear how that decision will affect the studio’s relationship with theater owners. There are already reports of AMC banning Universal movies from its theaters due to the release. With cinemas struggling to stay afloat with their doors forced closed, could this traditional industry now be standing on the edge of a knife?
Is the living room the new cinema?
As if things weren’t bad enough for the theater folk, now the Academy Awards (a.k.a. The Oscars) has ruled that streaming movies are eligible for nominations during this pandemic, whereas before there were strict regulations around movies needing to be released for a period of time on the big screen. I can almost hear Reed Hastings chomping at the bit to get Netflix its first ‘Best Picture’ win next year.
Bet you didn’t know
Age-wise, 25-39-year-olds are the largest movie-going demographic, making up 23% of all movie audiences in the U.S. Millennials love cinema it seems.