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But first, the macro wrap-up:
Earnings season is well underway, with a mixed set of results. Meta kicked the week off dragging the market down, but positive earnings calls from Tesla, Microsoft and Google have all helped stabilise the S&P 500, which is up 0.7% this week.
Meta shares tumble 16% 📉
Fears rekindled: For the last year or so, investors have been impressed with Zuckerberg’s efficiency running Meta. However, there are now concerns at his level of spending for 2024, as he vows to turn Meta into “the leading AI company in the world”, sending its shares tumbling to $431 from a high of $493.
Hey big spender: Last year, capital spending totalled $28bn, with this year forecasted to be $40bn. The extra $13bn will help Meta accelerate its AI roadmap. Some investors may be having flashbacks to Zuck’s trigger-happy Metaverse days.
Meta still beat earnings: Meta actually beat earnings estimates, despite shares dropping. Revenue gained 27% to $36.5bn in Q1 2024, just above analysts’ expectations of $36.2bn. It remains 42% up year-to-date.
Kering shares fall 9% 🛍️
Demand is down: Shares of French luxury group Kering sank more than 9% on Wednesday. It’s expecting a sharp downturn in the first half of 2024 due to falling demand for its lead brand, Gucci.
Luxury’s losing: Kering anticipates a decline of 40% in first-half operating income, compared to this point last year, as it struggles to retain market share in the discerning luxury market.
Time to diversify? Kering’s stock is often dictated by Gucci, as the brand brings in 3 times more revenue than its second-largest brand, Saint Laurent. Competitor LVMH has managed to diversify outside of fashion goods, meaning it can better weather the luxury storm.
Spotify tops $1 billion in gross profit 🔊
On track: On Tuesday, the streaming giant released Q1 earnings showing it’s on track to make its 2024 revenue growth.
Consistently profitable: Revenue jumped 20% and gross profit topped $1 billion, with CEO Daniel Ek stating in a LinkedIn post, “As an adult company we are now consistently profitable, which is great news.”
Price hikes: The secret? Price hikes. Spotify’s increasing pricing in the US by $1, and is considering doing the same later this year. Further hikes up to $2 are expected in the U.K, Australia and other countries.
What have we learnt this week? 🤓
MetAI: Meta’s going big on AI like it did on the metaverse. Can it get it right this time? It seems well-positioned to, but investors are wary.
Kering is reliant on Gucci: Kering also owns Bottega Veneta, but it did less than six times the revenue Gucci gained in 2023.
Price hikes are a balancing act: Subscription based businesses like Spotify need to be careful when hiking prices; it may please shareholders, but it upsets customers.
Stock announcements 👀
Here are the key earnings dates to look out for next week:
Monday 29th April: MicroStrategy
Tuesday 30th April: Amazon, 3M, Coca-Cola, McDonald’s, Starbucks, PayPal, Pinterest
Wednesday 1st May: Kraft Heinz, Mastercard, Pfizer, Etsy
Thursday 2nd May: Apple, Coinbase
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*Figures and ratings correct as of 25th April 2024.
Past performance does not guarantee future results. Capital at risk when investing. This content is for educational purposes only. Shares does not provide investment advice. If you are unsure about anything, please seek advice from an authorised financial advisor.
