SCHEDULE JANUARY 22 TO JANUARY 26
| MONDAY 22 | TUESDAY 23 | WEDNESDAY 24 | THURSDAY 25 | FRIDAY 26 |
| RATHEON (RTX) NETFLIX (NFLX) UNITED AIRLINES (UAL) JOHNSON AND JOHNSON (JNJ) | TESLA (TSLA) | VISA (V) |
UNITED AIRLINES
United Airlines forecasts first-quarter loss due to Boeing 737 Max 9 grounding
RATHEON
RTX beats estimates on aviation strength, defense demand
RATHEON (RTX) Q4 2023 Earnings Call Transcript
NETFLIX
Netflix adds 13.1 million subscribers, tops revenue estimates as membership push gains steam
JOHNSON AND JOHNSON
Johnson & Johnson narrowly tops quarterly estimates as pharmaceutical, medtech sales jump
TESLA
Tesla shares drop 6% on weak auto revenue, warning of slower growth in 2024
SCHEDULE JANUARY 29 TO FEBRUARY 2
| MONDAY 29 | TUESDAY 30 | WEDNESDAY 31 | THURSDAY 01 | FRIDAY 02 |
| MICROSOFT (MSFT) | BOEING (BA) PHILLIPS 66 (PSX) | APPLE (AAPL) AMAZON (AMZN) META PLATFORMS (META) FERRARI (RACE) | CHEVRON (CVX) |
MICROSOFT
Microsoft issues light guidance even as Azure growth drives earnings beat
BOEING
FERRARI
Ferrari finishes a record year by topping Wall Street’s estimates
APPLE
Apple stock falls after company gives outlook suggesting weak iPhone sales
META PLATFORMS
stockmarketHQ Meta Report
We listened to the Meta conference call today. By no means is this a negative view of the earnings call, simply because you can’t argue with the success of the stock price, but consider it an ‘objective’ view, outside of the AI hype-train.
Meta beat analyst Earnings and revenue estimates. This is good. But not by any more than Microsoft or Google beat their respective analyst estimates, yet Meta has had a very different post earnings announcement stock price reaction. In any other circumstance, Meta might have had a similar response however they made two important announcements which differentiated the quarterly reports
- $50 Billion stock repurchase authorization
- Dividend of $0.50 / quarter or $2.00/year which is roughly a 0.5% annual dividend.
These two points are important for reasons we will examine shortly, but first let’s review the earnings conference call.
Meta announced the following metrics
- Earnings per share: $5.33 vs. $4.96 expected by LSEG, formerly known as Refinitiv
- Revenue: $40.1 billion vs. $39.18 billion expected by LSEG
- Daily active users (DAUs): 2.11 billion vs. 2.08 billion expected, according to StreetAccount
- Monthly active users (MAUs): 3.07 billion vs. 3.06 billion expected, according to StreetAccount
- Average revenue per user (ARPU): $13.12 vs. $12.81 expected, according to StreetAccount
Those numbers themselves are impressive, they did beat analyst estimates, but they were not ‘blowout’ numbers.
The conference call could be described as a ‘conceptualization’, without a clear path on products or an end objective on initiatives. Zuckerberg conceptualized an enterprise product with an AI assistant – well this is what Microsoft does with its Office 365 with Copilot AI and ChatGPT. Zuckerberg conceptualized a spatial computing platform – well this is what Apple is doing with its Vision Pro. Zuckerberg conceptualized the buildout of data centres and servers – well this is what Amazon’s Web Services division does. Zuckerberg conceptualized their Llama, Large Language Model (LLM), as becoming the ‘industry standard’ LLM for AI developers – well that is what chatGPT does. Effectively Zuckerberg conceptualized moving the business into all the areas that others are already dominant in, but doing it better and in a way that is more useful by corporations and society.
Those are really big conceptualizations.
The following three statements are important
- “I recently shared that, by the end of this year, we’ll have about 350,000 H100s, and including other GPUs, that will be around 600,000 H100 equivalents of compute…” – Zuckerberg
- “…we’ll focus on rolling out services until they reach hundreds of millions or billions of people. And usually, only when we reach that kind of scale do we start focusing on what monetization will look like”
- “In the fourth quarter, we repurchased $6.3 billion of our Class A stock, bringing our total share repurchases for the full year to $20 billion. We had $30.9 billion remaining on our prior authorization as of December 31. And today, we announced a $50 billion increase in our stock repurchase authorization”
- “Q4 total Family of Apps revenue was $39 billion, up 24% year-over-year…Turning now to the revenue outlook. We expect first quarter 2024 total revenue to be in the range of $34.5 billion to $37 billion…. Turning now to the CapEx outlook. We anticipate our full year 2024 capital expenditures will be in the range of $30 billion to $37 billion, a $2 billion increase of the high end of our prior range. We expect growth will be driven by investments in servers, including both AI and non-AI hardware, and data centers as we ramp up construction on sites with our previously announced new data center architecture.”
- “…first of all, I would say that we don’t expect our GenAI products to be a meaningful 2024 driver of revenue. But we certainly expect that they will have the potential to be meaningful contributors over time…Right now, the most near-term monetization opportunity is with our ad creative tools.”
What does all that mean at stockmarketHQ
Meta is generating piles of revenue, $39B for Q4 2023, however they did provide a lower forecast for Q1 2024 of $34.5-$37B while increasing full year capital expenditures by $2B to a range of $30B-$37B.
Generally that combination of lighter guidance and increasing costs would have a negative impact on the stock price.
A big issue has been the monetization of the AI development. They clearly stated that AI products would not be a driver of revenue in 2024 and their strategy is to create products, roll them out and then figure out how to monetize them afterwards.
The biggest take-away is a read through to Nvidia – Meta is just one of multiple companies, and even governments that are buying massive quantities of Superchips which reinforces the stockmarketHQ Investment Thesis for Nvidia.
Overall, Meta remains an advertising platform and their best AI monetization is serving ads better and more effectively. It’s what they already do, only better.
Anything beyond that is a ‘conceptualization’, and reminiscent of Elon Musk’s conceptualizations of RoboTaxiis, colonization of mars, and becoming the worlds largest and most profitable vehicle manufacturer.
However, Tesla climbed from $200/share to $3000/share in a short period on the premise of conceptualization.
On a bigger scale the two announcements are possibly the biggest drivers of the stock price.
- Additional $50B share repurchase authorization in addition to the remaining $30B from the previous authorization for a total of an $80B repurchase program. A share repurchase program is the best defence against short sellers who attempt to drive the stock price down. It also allows the company to artificially manipulate the earnings per share which drives the stock price higher. The downside to a repurchase program is that Meta Executives have a stock payment component to their compensation, so they can indirectly sell their shares back to the company through the repurchase program, at the expense of the shareholders.
- Dividend – many large funds, such as mutual funds, pension funds etc have a stipulation that they only invest in companies with a dividend. By providing a dividend, Meta qualifies for inclusion in those funds which should drive institutional ownership and provide a greater underlying stability to the share price.
Both of these are strategies successfully incorporated by Apple, Microsoft and Nvidia.
In the near term, Big Money Managers seem to be overlooking the shortcomings and small investors keep seeing a stock price that only goes up. So the stock price of Meta keeps going up until it stops going up.
Meta shares jump 14% after profit triples and company announces first-ever dividend
AMAZON
Amazon reports better-than-expected results as revenue jumps 14%
CHEVRON
Chevron earnings fall but shareholders see record windfall in 2023, company raises dividend 8%
SCHEDULE FEBRUARY 5 TO FEBRUARY 9
| MONDAY 5 | TUESDAY 6 | WEDNESDAY 7 | THURSDAY 8 | FRIDAY 9 |
| CATERPILLAR (CAT) | GE HEALTHCARE (GEHC) CUMMINS (CMI) CHIPOTLE MEXICAN GRILL (CMG) | DISNEY(DIS) | EXPEDIA (EXPE) |
CATERPILLAR
GEHEALTHCARE
CUMMINS
CHIPTOLE MEXICAN GRILL (CMG)
Chipotle earnings crush estimates as restaurant traffic grows 7.4%
DEERE (DE) – FEBRUARY 15 (TO BE CONFIRMED)
NVIDIA (NVDA) – FEBRUARY 21 (TO BE CONFIRMED)
COSTCO (COST) – MARCH 7 (TO BE CONFIRMED)