This is a first quarter that will leave a lot of sorrow.
While concerns over technology were already raised as the Federal Reserve raised interest rates in order to reduce inflation, there was still hope that tech tenants will provide some assurance on the future for the companies.
It''s true that investors were concerned about this earnings season, but to imagine that it would become a nightmare was unimaginable.
Apple (AAPL) - Get Apple Inc. Report, Amazon (AMZN) - Get Alphabet Inc. Class A Report Could Make People forget the potential underperformance of Facebook (Meta) (FB) - Get Meta Platforms Inc. Class A Report, or even Netflix (NFLX) - Get Netflix, Inc. Report.
The reality has surpassed investors'' worst nightmares in the first quarter. According to the famous FAANG, fears about a potential recession are well-founded.
China is set to shut down in order to try and limit the spread of Covid-19''s resurgence, which has shattered the industry''s supply chains.
The rising raw materials prices also increase the price of manufacturing goods. Russia''s invasion of Ukraine already appears to slow growth in Europe. But here''s just a few things to keep an eye on in the quarterly releases of the big business names.
Netflix Started The Nightmare
Revenues increased 2.9 percent from the previous year as a result of the loss of 200,000 international subscribers in the period, and Netflix has warned that it will lose another two million worldwide net paid additions over the three months ending in June.
Netflix has indicated that it is considering the introduction of advertising on the platform, breaking with what had made it known: the absence of advertising.
Netflix''s stock has dropped 68.4% since December 31, with a market cap of $84.57 billion. This snuff shows some people that Netflix is no longer a member of the FAANG club.
Happily for Netflix, we had not experienced the worst yet. Despite Google and Facebook''s mixed quarterly results, mostly due to TikTok''s push for online advertising, this was not the case for Apple and particularly Amazon.
In one session, $206 billion in market capital is paid out.
Amazon said on April 28 that it suffered a loss of $3.8 billion in the previous quarter, or $7.56 per share, comparativement to a profit of $8.1 billion a year ago, or a profit of $15.79 per share.
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Revenues increased 7% from last year to $116.4 billion, the lowest level in over a decade.
For the current quarter, Amazon said it expects operating incomes of between -$1 billion to +$3 billion on revenues in the range of $116 billion to $121 billion. Comparing to Refinitiv''s forecast of $125 billion, it said.
The eruption and the subsequent war in Ukraine have resulted in unusual growth and challenges, according to CEO Andy Jassy. "Today, our teams are constantly focused on increasing productivity and cost efficiency throughout our fulfillment network. We know how to do this and have done it previously."
"This may take a while to perform ongoing inflationary and supply chain pressures, but we see significant progress on a range of customer experience dimensions, including delivery speed performance, as were initially approaching levels previously unknown since the months preceding the epidemic in early 2020, according to the author.
Investors were off guard as they believed Amazon might manage the end of the pandemic economy, which had seen users turn to internet shopping.
The reopening of the economy appears to be unlikely to spare Amazon''s core retail business. Despite its growing operating expenses, Amazon has also had to hire workers in its warehouses and is now dealing with rising logistics and labor demands.
The company''s first quarterly loss since 2015 was seen as $7.56, or about $16.00 shy of Streets earnings per share expectations, according to William Blair analysts.
Amazon''s stock has dropped 4.15% at $2,485.63, their worst day since July 2006. Around $206 billion in market cap went up in smoke in 24 hours. Market cap has remained at $1.26 trillion.
Apple Does Not Reassure
In the same April 28 session, Apple''s stock plummeted 3.66% to $157.65.
After China closed several schools to mitigate the spread of Covid-19 and the persistent silicon shortage, the company said it would see a decrease in the "$4 billion to $8 billion range" during the current quarter.
"These constraints are mostly focused on the Shanghai Corridor, and... on a positive note, almost all of the affected final assembly facilities have now been restarted," said CEO Tim Cook during the earnings'' call.
"And so the range, the $4 billion to $8 billion range, reflects several steps of repurposing the city. We''re also happy that the COVID case count that''s been reported in Shanghai has decreased in the last few days, and there''s plenty of reason for concern there."
Facebook''s stock has dropped 2.56% to $200.47, while Google''s stock has dropped 3.72% to $2,299.33.