Thursday Apr.29, 2021

💰 Apple and Google really did it

_The scene at Apple, Google, and Facebook offices yesterday [laflor/E+ via GettyImages]_

Hey Snackers,

Walmart is challenging Kanye's Yeezy logo, saying it's so similar that customers may get the brands confused. Yeezys on Aisle 6, right next to the Cheez Whiz.

Stocks briefly hit a record yesterday after the Fed decided to keep interest rates near zero. The central bank also hinted rates would stay there for a while, despite the economic rebound.

Smash

Apple's jaw-dropping quarter is a win across the board (and investors get some sugar)

No imposter syndrome here... Apple just showed off why it deserves to be Earth's most valuable company. The Fruit demolished earnings expectations.

Sales were up 54% to $90B, a record for the January to March quarter.
Profit more than 2X'd to $24B, notably higher than Wall Street expected.

Winners across the keyboard... Apple saw double-digit sales growth across all product categories (even iPad) for the second quarter in a row. Mac revenue soared 70% to a fresh record, as you upgraded your WFH life. iPad sales were up 79%, as you distracted your toddler with the tablet. And Services revenue (think: Music, TV, Books) reached an all-time high.

iPhone was the star chef in Tim Cook's kitchen, serving up expectation-smashing sales growth.
iPhone sales soared 65% to $48B (more than half of Apple's total sales). The new 5G-enabled iPhone 12 fueled a sweet upgrade cycle.

Big profits can come back to investors... Investors own a piece of the company pie, so they can share in the company's profit. After this killer quarter, Apple is sharing the love with investors: it authorized $90B in stock buybacks, much more than it did the last two years. By buying back a large amount of its own shares (reabsorbing them), a company can improve its stock price by reducing the numbers of shares outstanding. Another way to reward shareholders is through paying dividends: and Apple just raised its dividend by 7%.

Boom

FB and Google smash earnings: digital ads are thriving, but there could be trouble ahead

If I see another Postmates ad... Two ad giants reported quarterly earnings this week, and they both crushed it. Facebook now has nearly 3.5B monthly users across FB, Insta, and WhatsApp — a 15% increase from a year prior. Considering that nearly half of Earth's population uses Facebook, these earnings growth numbers are even more impressive:

Sales soared 48% from 2020 to $26B (ads made up 97% of that).
Profit nearly 2X'd to $9.5B, partly thanks to a 30% jump in the average price/ad.
FB makes ~$9/year per user, but $48/year for each user in North America.

Stealing Zuck's thunder... Google also had a monster quarter, notching a January to March revenue record. Sales soared an expectation-smashing 34% to $55B (more than double FB's) — and 81% of those came from advertising. Profit more than doubled to $18B.

YouTube was the star, with sales jumping 49% to $6B as you binge-watched skincare vlogs and how-to vids. YouTube's quarterly sales alone = ~85% of Netflix's quarterly total.
1B hours: How much time YouTube's 2B monthly users spend watching videos per day. And unlike Netflix, YouTube isn't paying billions to actors and directors for content.

Storm clouds are brewing... that could rain on ad giants' parade. First: Apple is rolling out iOS privacy changes this week that are poised to hurt FB's precious ad-targeting abilities – and likely, its sales. FB expects growth to slow in the second half of the year as these roll out. By some estimates, FB could lose as much as $3B/year. Meanwhile, Google may feel pressured to implement similar changes on Android, which could hurt ad sales. Second: President Biden nominated Big Tech critic Lina Khan to lead the FTC last month, which could amp up antitrust pressure. Finally, reopenings are expected to reduce time online (bad for ad views).

What else we’re Snackin’

Progress: The vax rollout appears to be successfully curbing new Covid infections in the US, now that nearly 40% of adults are fully vaxed.
Spend: In his first speech to Congress, President Biden proposed a $1.8T social spending plan, paid for largely by tax hikes on the wealthy.
Play: Spotify dropped another quarter of strong subscriber gains, notching nearly 360M monthly users (thanks, Joe Rogan).
Depart: Boeing reported its sixth-straight quarterly loss, but expects 2021 to be a turning point as people start traveling again.
Shop: Shopify's sales more than doubled from a year ago. It powers online stores, so it's still riding the ecomm boom.

Thursday

Earnings expected from Amazon, Twitter, Nio, Mastercard, Altria, and Caterpillar
US reveals first set of GDP data for first quarter of 2021
Weekly jobless claims

Authors of this Snacks own shares of: Apple and Google

ID: 1626810

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Sales of what are up 136% since 2019?

Don't be a sucka

$70B

Alphabet shares are soaring in the after-market session, with a initial jump of more than 10% implying a gain of upwards of about $200B in market value when the stock opens tomorrow morning.

Google’s parent company crushed earnings expectations, initiated a cash dividend for the first time, and authorized a fresh $70B in share repurchases for good measure. The market likes it very much.

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No, Apple hasn’t cut its Vision Pro production estimates in half

Quite a few news outlets are reporting that Apple thinks it’s only going to sell 400,000 to 450,000 Vision Pros in 2024, compared a “market consensus” of 700,000 to 800,000. They’re all citing a note from Apple analyst Ming-Chi Kuo.

Obviously there’s no question that Apple’s $3,500 face computer will have a limited audience and could be a huge flop, but this also doesn’t seem like accurate news.

The issue is that 1) this 400,000 number isn’t new. Back in July of 2023, the Financial Times reported that Apple planned to make fewer than 400,000 units in 2024, reducing its initial projections of 1M units, citing two people close to Apple and, the Chinese contract manufacturer assembling the device. 2) It's unclear who was estimating 700,000-800,000 Vision Pros in the first place, but it appears that it was Ming-Chi Kuo himself?