Monday May.03, 2021

📲 Big Tech's big blowout

_Apple checks the earnings iMessage [Flashpop/DigitalVision via GettyImages]_
_Apple checks the earnings iMessage [Flashpop/DigitalVision via GettyImages]_

Hey Snackers,

The Declaration of Independence is going public via IPO. Call it an Initial Patriot Offering.

Stocks fell for the week, but ended April with the biggest monthly gain since November. Investors were pumped that the Fed decided to keep interest rates near zero, for now. A streak of killer tech earnings also helped...

AAPI Heritage Month: In May, we're celebrating Asian-Americans and Pacific Islanders. Stay tuned for special coverage.

Whoa

Big Tech giants drop back-to-back records (thanks to your 2021 spending)

Feeling like Jordan '96,'97... The "Big Tech 5" demolished earnings with jaw-dropping records. Despite the vax rollout and reopenings, some online pandemic habits seem to have only ramped up from January to March...

  • Amazon had its best first quarter ever, as the ecomm boom continued. Sales surged 44% from 2020 to a wild $109B, and profit more than 3X'd. Fun fact: ads were one of the 'Zons fastest-growing categories. Oh, and Bezos called Prime Video and AWS "our kids" (#nostalgic).
  • Apple's sales soared 54% to a Q1 record, and profit more than doubled to a shocking $24B. All product categories saw double-digit sales growth, but iPhone brought home the real iBacon (thanks, 5G upgrades).
  • Google also smashed sales expectations, and profit more than doubled to $18B. YouTube was the star, with sales jumping 49% to $6B (more than Snap, LinkedIn and Pinterest... combined).
  • Facebook's sales soared 48% to $26B (nearly all from ads). Profit ~2X'd, thanks to a surge in ad prices. FB users, including Insta and WhatsApp, jumped 15% to 3.5B — aka: nearly half Earth's population.
  • Microsoft posted its strongest revenue growth since 2018 (partly thanks to higher PC sales).

BTW... The "Big Tech Five" makes up ~22% of the S&P 500's value, which reflects the total stock market. After a year of stocks thriving while the economy suffered, the economy seems to be starting to catch up. And consumer spending is playing a big role.

Big Tech's records reflect economic confidence... Consumer spending is rebounding thanks to stimulus(es), vaccines, and business reopenings. Retail sales surged 10% in March, the largest jump in a year. That benefited Amazon, but it also boosted ad giants, who rely on your spending to sell ads. Spending fueled 6.4% GDP growth last quarter, the second-fastest pace since 2003. Meanwhile, the techy Nasdaq index is up 62% over the past year. But a few clouds could rain on Big Tech's parade. Like: increasing antitrust scrutiny (the Apple-Epic "App Store monopoly" trial starts today) and inflation concerns.

Events

Coming up this week...

Checking in (all at once)... It's hotel week, with Hilton, Hyatt, Booking, Expedia, Tripadvisor, Starwood, and Wynn Resorts all dropping earnings (now breathe). A pandemic isn't the best time to sip mojitos poolside, but we have seen "revenge spending." Flight and restaurant sales surged in March, and TSA numbers are notching pandemic highs. But global Covid cases are still soaring, and earnings are expected to be lower than a year ago.

Coming in mRN-ASAP... Moderna and Pfizer earnings. Unlike J&J, the two mRNA vaccine makers didn't pledge to pass up vax profits (which could be big). Pfizer projects $15B in Covid vax sales for 2021, and Moderna forecasts $18B+. Vax sales will likely make a bigger difference for Moderna than for pharma giant Pfizer. Moderna has never made a profit, and the Covid vax is its first product. Pfizer stock is up 5% since January last year. Moderna is up 850%.

Zoom Out

Stories we're watching...

Biden's big spending proposal... Another one. Last week, President Biden unveiled a $1.8T social spending plan that could transform the role of US government. It includes free pre-K and community college, federal paid family leave, and extended tax credits. It also brings Biden's total proposed spending tally to $6T, and would be paid for by tax hikes on the wealthy. We'll see how it fares in Congress, where Dems have a razor-thin majority.

The "DPF Effect"... We're seeing the "demand pulled forward" effect hit some coronaconomy thrivers. DPF: when user growth that should've happen last quarter actually happened in 2020. Pinterest stock plunged 11% last week on slowing user growth — the moodboard-boom already happened. Netflix also blamed DPF for its big subscriber miss last quarter. We’ll see if DPF hits other coronaconomy thrivers like Peloton, which reports this week.

ICYMI

Highlights from last week...

  • Energy: Exxon is facing the “Blockbuster Alarm” on oil — change and go green, or go extinct.
  • Ads: Apple is rolling out big iOS privacy changes that could hurt competitors like Facebook and Google, while bolstering its own ad biz.
  • Fashion: Crocs shares soared 19% for the week after it reported record first-quarter sales because functional = the new fashionable.

What else we’re Snackin’

  • Hustle: Why everyone wants to work in the gig economy now.
  • Release: 10 ways to let go of anger (without ignoring it).
  • Yolo: After a year of hunching over MacBooks, Millennials embrace the "YOLO Economy."
  • Swipe: Four reasons to use credit cards... as if they were debit cards.

This Week

  • Monday: Earnings expected from Estée Lauder, Chegg, and The Mosaic Company
  • Tuesday: Earnings expected from Pfizer, CVS, Hyatt, Zillow, DuPont, T-Mobile, and Under Armour
  • Wednesday: Earnings expected from Etsy, Paypal, GM, Twilio, Hilton, Hyatt, Wynn Resorts, Booking, Fox, Scotts Miracle-Gro, and Zynga . Jessica Alba's Honest Co expected to IPO
  • Thursday: Weekly jobless claims. Earnings expected from Moderna, Peloton, Beyond Meat, Expedia, Volkswagen, Live Nation, and AMC
  • Friday: Earnings expected from Tripadvisor and IAC. Monthly Employment Report drops

Authors of this Snacks own shares of: Amazon, Apple, Google, Microsoft, and Moderna

ID: 1630662

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Kering’s other brands, which include Yves Saint Laurent, Bottega Veneta, and Balenciaga, fared slightly better — but the only real bright spot was the company’s eyewear division, where sales rose 24% (9% on a comparable basis).

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Kering Warns Profit to Tumble Following Gucci Woes in China

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