Normally, Apple, Facebook, and Tesla would dominate the news cycle on a day when all three reported quarterly results.
But things are far from normal. These days, the market narrative revolves around a handful of small stocks being driven into the stratosphere by a legion of determined retail investors using a Reddit message board as a kind of forward base from which to launch an insurgency against shorts and “suits.”
This week, that dynamic reached a potential tipping point, beyond which it might have ramifications for larger names, both on the short and long side.
Read more: ‘This Is A Riot’ — Reddit Stock Mania Channels Populist Battlecry
On the heels of a truly rough day for the broader market, Facebook delivered results that generally beat estimates. Revenue of $28.07 billion was better than the $26.41 billion the market expected, while EPS of $3.88 easily beat consensus. Monthly and daily active users printed marginal beats.
“We had a strong end to the year as people and businesses continued to use our services during these challenging times,” Mark Zuckerberg mused, describing himself as “excited” about Facebook’s products in 2021, a year during which he said the company will “build new and meaningful ways to create economic opportunity and help people just have fun.”
There are too many jokes and not enough time to write them all.
Suffice to say “having fun” on Facebook can mean different things to different people. To their credit, Facebook, along with other tech giants, has taken steps recently to ameliorate the extent to which the platform can be leveraged to spread misinformation and disseminate hate speech. And yet, to say that much work remains to be done in that area would be an understatement. The company faced a veritable advertiser revolt last year and will continue to be tested by those seeking to use the site to organize events like those which transpired at the Capitol on January 6.
What caught investors’ ears after hours was commentary around the outlook. “We continue to face significant uncertainty as we manage through a number of cross currents in 2021,” the company said, adding that beneficial pandemic trends could “moderate or reverse” going forward, serving “as a headwind to our advertising revenue growth.” Facebook also said it expects “to face more significant ad targeting headwinds in 2021… includ[ing] the impact of platform changes, notably iOS 14, as well as the evolving regulatory landscape.”
Guidance on expenses and capex was unchanged.
Tesla, meanwhile, missed profit estimates, reporting adjusted EPS of 80 cents. Consensus was looking for $1.03. Revenue of $10.74 billion was ahead of estimates, as was free cash flow ($1.87 billion). Margins missed, capex was higher than expected, and cash was $19.38 billion, versus consensus of $17.16 billion.
Operating margins shriveled up, falling to 5.4% from 9.2% in the previous quarter.
As for Apple… well, the company reported fiscal year Q1 revenue of $111.44 billion, up 21% YoY. That was a substantial beat. Consensus was looking for “just” $103 billion. EPS of $1.68 was also a beat. The market was looking for $1.42 there.
“Our December quarter business performance was fueled by double-digit growth in each product category, which drove all-time revenue records in each of our geographic segments and an all-time high for our installed base of active devices,” CFO Luca Maestri remarked.
Everything was a beat. Or, everything but Mac, where revenue came in just shy of estimates.
iPhone revenue was $65.6 billion compared to the $60.33 billion the market expected. iPad sales were $8.44 billion, easily ahead of the $7.57 billion the street wanted to see. Wearables, home and accessories revenue of $12.97 billion was more than a billion ahead of estimates. And service revenue of $15.76 billion was a solid beat versus consensus of $14.89 billion.
Maestri touted record operating cash flow of $38.8 billion. Apple returned more than $30 billion to shareholders over the quarter. Cook called China “strong across the board.” Revenue for the company in the world’s second-largest economy rose 57% YoY.
The only “problem” appeared to be the lack of guidance, which the company is reluctant to give in the face of the pandemic.
All told, it’s hard to see anything that jumps out as overtly negative from Wednesday’s trio of reports from some of the market’s most important names.
And yet, considering how far they’ve all run, incessant chatter about “bubbles” (with Tesla being the poster child) and generally frayed nerves, it’s not hard to envision a “sell the news” dynamic playing out.