💰 Apple and Google really did it

Thursday, April 29, 2021 by Robinhood Snacks | Disclosures
_The scene at Apple, Google, and Facebook offices yesterday [laflor/E+ via GettyImages]_

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

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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
1. 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.
THE TAKEAWAY

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

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.
THE TAKEAWAY

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.
Snacks Daily Podcast

Crocs lived its best life in 2020 thanks to the Comfort Economy (and JBiebs). The stock soared 26% this week, because its 2021 life is even better.

Tune in to hear why Jibbitz are the real hero product.

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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