Bulls, Bitcoin, & Beyond

Market Moves Yesterday

S&P 500 @ 4,906.19 ( ⬆️ 1.25%)

Nasdaq Composite @ 15,361.64 ( ⬆️ 1.30%)

Bitcoin @ $43,043.18 ( ⬆️ 1.1%)

Hey Scoopers,

TGIF! Here’s what’s making waves in the market today.

👉 Big tech earnings are in

👉 Gold demand hit record highs in 2023

👉 FTX to repay customers

So, let’s go 🚀

Earnings: Meta, Apple and Amazon

Big tech giants, including Meta, Apple, and Amazon, announced their quarterly earnings (ended in December) yesterday. Let’s see how each of them performed.

Meta triples net income

In Q4 of 2023, Meta reported:

👉 Revenue of $40.1 billion vs. estimates of $39.18 billion

👉 Earnings of $5.33 per share vs. estimates of $4.96 per share

👉 Average revenue per user of $13.12 vs. estimates of $12.81

Meta’s revenue jumped 25% in Q4, the fastest growth rate since 2021. A narrowing cost base allowed Meta to decrease expenses by 8% to $23.73 billion, more than doubling its operating margin to 41%.

Its net income tripled to $14 billion or $5.33 per share, up from $4.65 billion or $1.76 per share, in the year-ago period.

Meta also disclosed it will pay investors a quarterly dividend of $0.50 per share, indicating a forward yield of 0.45%. The social media giant ended 2023 with $65.4 billion in cash, up from $40.7 billion in 2022.

Meta’s Reality Labs unit passed $1 billion in quarterly sales while reporting $4.65 billion in losses in Q4.

Meta forecasts sales between$34.5 billion and $37 billion in Q1, higher than consensus estimates of $33.8 billion. It forecast 2024 expenses to range between $94 billion and $99 billion.

Meta shares have gained 15% in pre-market trading, valuing the company at $1.2 trillion by market cap. It has now gained 278% since the start of 2023.

Weak iPhone sales impact Apple

In fiscal Q1 of 2024, Apple reported:

👉 Revenue of $119.58 billion vs. estimates of $117.91 billion

👉 Earnings of $2.18 per share vs. estimates of $2.10 per share

Despite surpassing Wall Street estimates in Q1, Apple stock is down 3% in pre-market trading as its sales in China fell 13% year over year. Further, the tech heavyweight did not provide any guidance for the March quarter, spooking investors in the process.

Apple grew sales by 2% in the December quarter after four consecutive quarters of top-line declines. Despite an uncertain macro environment, Apple’s gross margin soared past 46% in Q1, showcasing its pricing power.

Apple’s high-margin Services business rose 11% to $23.11 billion in Q1, below estimates.

Apple ended Q1 with 2.2 billion active devices in use, a metric used to forecast growth in the Services business. With more than 1 billion in paid subscriptions across Apple Music, Apple Care, Apple TV+, and the App Store, the company has a highly engaged user base.

Amazon Tops Estimates

Shares of Amazon are up 7% in pre-market after it reported:

👉 Revenue of $170 billion vs. estimates of $166.2 billion

👉 Earnings of $1 per share vs. estimates of $0.80 per share

The e-commerce behemoth forecast Q1 of 2024 sales between $138 billion and $143.5 billion, higher than estimates of $142.1 billion.

Like other companies, Amazon has reined in costs in recent quarters to improve the bottom line, increasing its net income to $10.6 billion, up from just $278 million in the year-ago quarter. Comparatively, sales grew by 14% after a robust holiday season.

Amazon Web Services sales stood at $24.2 billion, up 13% year over year and in line with consensus estimates.

Moreover, the company’s profitable ad business increased revenue by 27% to $14.7 billion. In January, it began rolling out ads on Prime Video, unlocking another revenue stream for Amazon.

Geopolitical Tensions Spurs Gold Demand

Gold demand touched record highs last year due to geopolitical tensions and a weak Chinese economy.

According to a World Gold Council report, total gold transactions rose to 4,899 tons in 2023, up from 4,741 tons in 2022.

The key drivers of gold demand were:

👉 The Russia-Ukraine war

👉 The Israel-Hamas conflict

👉 A slowing Chinese economy

Gold prices touched a record high of $2,100 ounce per ounce in December as central banks and investors increased exposure to the yellow metal. In fact, central bank purchases have exceeded 1,000 tons in the last two years.

The People’s Bank of China bought 225 tons of gold in 2023, raising its total stock to 2,235 tons.

The ongoing real estate crisis in China and the tepid performance of the country’s equity market are pushing investors towards gold, viewed as a safe haven asset. China’s gold bars investments surged 28% year over year in 2023.

China also dethroned India as the world’s largest gold jewelry buyer in 2023, as people purchased 603 tons of gold jewelry last year.  

FTX Aims to Payback Creditors

FTX was the second-largest cryptocurrency exchange in the world in 2022. Around 18 months back, the firm imploded within days and was forced to file for bankruptcy.

Sam Bankman-Fried, the CEO and founder of FTX, was charged with fraud in late 2023 after it was discovered the company used customer deposits to fund risky bets made by its sister company, Alameda Research.

Since its collapse, 36,000 users have claimed funds worth a whopping $16 billion from FTX. A new court hearing now states the company aims to repay its customers in full.

If FTX repays its customers, it should help rebuild trust among investors globally, accelerating the adoption of Bitcoin and other digital assets in the near term.

Headlines You Can’t Miss!

Apple’s AI product might launch in Q4 of 2024

Ferrari beats Wall Street estimates

Peloton stock slumps following a weak outlook

Volvo soars on higher sales

Binance launches marketplace for inscription tokens

Chart of The Day

The Federal Reserve would want inflation to range around 2% before it begins interest rate cuts.

In recent months, inflation has cooled off due to a decline in prices of goods as supply chain disruptions have normalized. Now, economists want services inflation to decelerate including housing.

Generally, housing costs in core PCE (personal consumption expenditure) lag changes in actual rents. Given weaker rent growth in the last year, you can expect further declines in the housing component of the core PCE index.

Further, services inflation is propped up by wage growth, which is ideal at 3.5% year over year, according to the Fed. Slower job growth should translate to a moderation in wage growth in 2024.

The year-over-year increase in core PCE might fall to 2.7% in Q2 of 2024, potentially triggering the start of Fed rate cuts in May.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.