Tag: online services

Netflix stock falls after subscriber growth, earnings forecast miss. But it’s bouncing back on ad plans, shared-password crackdown in U.S.

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Netflix Inc.’s stock initially plunged in after-hours trading Tuesday, after the streaming giant posted weaker subscriber growth and forecast a smaller profit than Wall Street expected. But shares later recovered and crossed into positive territory on company disclosures that its new ad-supported service is a success and its crackdown on shared accounts in the U.S. is coming this quarter.

Netflix
NFLX,
+0.29%
reported that subscribers increased by 1.75 million in the first quarter of the year, missing analysts’ average estimate of 2.2 million. Netflix reported fiscal first-quarter net earnings of $1.31 billion, or $2.88 a share, compared with $3.53 a share in the year-ago quarter.

Revenue improved to $8.16 billion from $7.87 billion a year ago. Analysts surveyed by FactSet had expected on average net earnings of $2.86 a share on revenue of $8.18 billion.

For the second quarter, Netflix executives guided for earnings of $2.84 a share on $8.24 billion in revenue, while analysts on average were expecting earnings of $3.07 a share on sales of $8.18 billion. Netflix no longer provides guidance on subscriber additions, a sign its years of rapid growth are clearly cooling.

Shares plunged lower than $300 in after-hours trading immediately following the release of the results, after closing with a 0.3% increase at $333.70. But shares had crossed into positive territory and were recently above $335 in the extended session.

Netflix executives have hoped to goose their financial results with cheaper, ad-supported options and a crackdown on password sharing. In a letter to shareholders Tuesday, company executives said the ads plan in the U.S. “already has a total ARM (subscription + ads) greater than our standard plan.”

At the same time, they disclosed a password crackdown in the U.S. will occur in the second quarter, a bit later from previous expectations.

“We shifted out the timing of the broad launch from late Q1 to Q2,” Netflix executives wrote. “While this means that some of the expected membership growth and revenue benefit will fall in Q3 rather than Q2, we believe this will result in a
better outcome for both our members and our business.”

Additionally, Netflix also announced that it will end the DVD-by-mail business that launched the company into consumers’ homes. Revenue from the DVD business had declined from $911 million in 2013 to $146 million in 2022.

“This a catch-22 environment for streaming companies as they are pivoting from chasing subscribers to chasing profits while at the same time inflation-weary consumers are reassessing their discretionary spending habits,” KPMG U.S. National Media Leader Scott Purdy said, in assessing the results. “Today’s figures, a bellwether for the industry at large, signal that winter is coming for the consumer. All of the subsidies are ending. Consumers can expect to be hit with ads, higher prices, and password sharing crackdown.”

Expectations among investors heading into Netflix’s quarterly report were muted. The focus was on Netflix’s switch toward better monetization with an ad-supported service and a rolling crackdown on shared accounts. Analysts in particular were closely watching the performance of Netflix’s new “Basic with Ads” plan ($6.99 a month) and its effectiveness in stanching the defection of subscribers to competing services from Walt Disney Co.
DIS,
+0.63%
and Apple Inc.
AAPL,
+0.75%.

Netflix’s rollout of the ad-supported tier could also have a temporary impact on margins: Netflix reported an operating margin of 21%, compared with about 25% in the year-ago quarter.

At the same time, Netflix put an end to paid shared accounts in some Latin American countries last year, and expanded plans to do so Canada, New Zealand, Portugal and Spain in February.

“In our view, the password-sharing crackdown will result in a greater number of subs as well as revenue because the primary account holder will either pay an additional fee for members who have moved out of the household or those sharing accounts become full subscribers,” Bank of America analysts said in a recent note.

Shares of Netflix have climbed 12% so far this year, while the broader S&P 500 index
SPX,
+0.09%
has advanced 8%.

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April 18, 2023
Netflix is sending its DVD-by-mail business to the Blockbuster graveyard

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Netflix Inc. is ending the DVD-by-mail business that first made it a household name and took down Blockbuster Video.

Netflix
NFLX,
+0.29%
executives announced Tuesday afternoon that the company will ship its last red DVD envelopes on Sept. 29, after 25 years. The business has dwindled in the past decade from more than $900 million in revenue in 2013 to less than $150 million last year.

“Our goal has always been to provide the best service for our members, but as the business continues to shrink that’s going to become increasingly difficult,” co-Chief Executive Ted Sarandos said in a blog post titled “Netflix DVD — The Final Season.”

Also see: Netflix stock falls after subscriber growth, earnings forecast miss. But it’s bouncing back on ad plans, shared-password crackdown in U.S.

Netflix launched as a DVD-by-mail service in an era that relied on physical media such as the discs to watch television shows and movies at home. The DVD business at the time was dominated by Blockbuster, which relied on brick-and-mortar stores that rented movies for a few days and charged late fees if they were not returned on time.

Netflix offered a different approach, allowing consumers to have a certain number of DVDs mailed to their home and return them at their leisure, which eventually led to the demise of Blockbuster. Eventually, the company began focusing on streaming media directly to consumers, and first offered that service for free to DVD subscribers.

Co-founder and former Chief Executive Reed Hastings — who announced he was stepping down from that position three months ago — decided to pivot from the successful DVD business to focus on streaming, which wasn’t an easy transition. When he announced that Netflix would sever the DVD and streaming businesses in 2011, effectively doubling the monthly price for consumers who wanted both offerings, it became one of the biggest debacles in Netflix history as consumers raged and canceled their subscriptions.

While the process was not easy — remember Qwikster? — Hastings’ vision for streaming services won out, with Netflix collecting roughly $31.5 billion in streaming subscription revenue last year, as the DVD business racked up $146 million. Some of the biggest names in entertainment and tech — Walt Disney Inc.
DIS,
+0.63%,
Apple Inc.
AAPL,
+0.75%,
Warner Bros. Discovery’s
WBD,
-1.79%
HBO, and many more — have followed Netflix’s path, and established streaming as one of the most dominant forms of media consumption.

For more: Netflix has changed drastically since its IPO —and is worth thousands of times more

“Those iconic red envelopes changed the way people watched shows and movies at home — and they paved the way for the shift to streaming,” Sarandos wrote in Tuesday’s announcement.

Netflix stock has also been a winner, despite a decline in late trading following earnings on Tuesday afternoon. Shares have increased more than 1,300% in the past decade, as the S&P 500 index
SPX,
+0.09%
has grown by about 167%.

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April 18, 2023
Why Snap is suddenly eligible to join the S&P 500

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Snap Inc.’s initial public offering led to changes that barred the company and others like it from joining major stock indexes, but at least one major index provider has decided to drop those limitations after less than six years.

S&P Dow Jones Indices announced Monday afternoon that a 2017 rule barring companies with multiple share classes from joining indexes such as the S&P 500
SPX,
+0.33%
has been dropped. The move comes after the index manager consulted with “market participants” at the end of last year to discuss several potential changes to the policy.

Snap
SNAP,
+1.78%
was the poster child for the initial change, after the parent company of the Snapchat mobile app went public in 2017 by selling a class of shares with no voting rights. That unprecedented move ensured that co-founders Evan Spiegel and Bobby Murphy would retain absolute power over their company even while selling shares to the public.

Snap’s move was an acceleration of an approach used by a generation of Silicon Valley tech companies to ensure that founders retained control of their companies even while selling shares to the public. Companies such as Facebook parent Meta Platforms Inc.
META,
-1.19%
and Google parent Alphabet Inc.
GOOGL,
-2.66%
GOOG,
-2.78%
used similar structures that provided their leaders with special shares that included increased voting rights, which Snap took further by offering no voting rights.

From 2017: Snap backlash, Facebook capitulation won’t stop founder-friendly stock structures

In response, FTSE Russell established rules about putting votes in the public’s hands while selling stock, and S&P Dow Jones Indices completely barred all companies that had multiple classes of stock from joining its core indexes. While FTSE Russell’s rule — which requires that at least 5% of votes rest in the hands of public investors — remains, S&P Dow Jones Indices will now drop its rule entirely, after roughly 80% of respondents voted in favor of a change in 2017.

There were other options besides completely dropping the rule. Participants in the consultation process were given several options and asked to rank them, including barring companies that only offer nonvoting stock to the public — such as Snap — or allowing companies that establish “sunset” provisions that would eventually revert all shares to equal voting rights.

Related: Investors want change, but founders like Mark Zuckerberg hold them off

Snap declined to comment Monday afternoon.

The change to allow all companies with multiple share classes to join the S&P Composite 1500 and its multiple component indexes is effective as of Monday, S&P Dow Jones Indices announced, though no changes were immediately made to any index. Tracking stocks will still not be eligible for inclusion, according to the announcement.

For more: As Snap melts down, its founders make sure to protect the people who matter — themselves

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April 17, 2023
Roku to lay off 200 employees, exit some leases to cut costs

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Shares of Roku Inc.
ROKU,
+5.46%
rallied 2.7% in premarket trading Thursday, after the streaming-media company disclosed that it would lay off 200 employees, or about 6% of its workforce as part of a cost-cutting plan. The plan will also include the exit and sublease, or cease the use of, certain office facilities. The company expects to record charges of $30 million to $35 million as a result of the plan, which will include severance payments, notice pay and employee benefit contributions. Most of the charges will be recorded in the fiscal first quarter, and the job cuts will be “substantially complete” by the end of the second quarter. The stock has soared 57.0% over the past three months but has tumbled 50.8% over the past 12 months, while the S&P 500
SPX,
+1.42%
has lost 12.5% over the past year.

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March 30, 2023
U.S. stocks close lower Tuesday as Treasury yields climb

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U.S. stocks ended modestly lower on Tuesday, as Treasury yields rose, keeping pressure on the rate-sensitive Nasdaq Composite Index. The Dow Jones Industrial Average DJIA shed about 37 points, or 0.1%, ending near 32,394, while the S&P 500 index SPX fell 0.2% and the Nasdaq COMP closed 0.5% lower, according to preliminary data from FactSet. Stocks fell, but ended off the session lows, as the 2-year Treasury rate BX:TMUBMUSD02Y climbed 10.5 basis points to 4.06%. Bond yields and prices move in the opposite direction. Tuesday also saw a raft of relatively upbeat economic data and increased expectations by traders in fed-funds…

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March 28, 2023
New Lyft CEO: ‘I don’t think of this as just an Uber battle. It’s a battle against staying at home.’

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Lyft Inc.’s incoming Chief Executive David Risher looks at the ride-hailing company’s competition with Uber Technologies Inc. as a way to keep both companies “honest and focused,” he said in an interview with MarketWatch on Monday.

“There’s lots of two-service dynamics, or market dynamics, like Coke and Pepsi, or the Nasdaq and the [New York Stock Exchange],” Risher said. “You want that level of competition.”

Lyft
LYFT,
-2.74%,
which has lost $2.2 billion, or about a third, of its market capitalization since it reported earnings last month, announced Monday that board director Risher will take over as CEO of the struggling company. He will replace company co-founder Logan Green, who will become chairman of the board.

Lyft is competing with much larger rival Uber
UBER,
-0.42%,
which has gained ride-hailing market share in recent years at the expense of Lyft, according to YipitData, which says Uber now has about 74% of U.S. market share vs. Lyft’s 26%. Risher declined to say much about how he would differentiate himself from the outgoing CEO, but he indicated that Lyft will not attempt to compete with Uber in other services, such as delivery.

“I don’t want to get in a car with someone that’s just delivered a pizza,” he said.

“At some point, I don’t think of this as just an Uber battle,” he said. “It’s a battle against staying at home. How do we get people out? How do we get them playing and working together?”

Lyft’s new top executive was for the past 13 years CEO of Worldreader, a nonprofit that focuses on children’s literacy through digital reading. Risher said because of that, he’s familiar with “doing more with less… you have to be more efficient.”

Risher will receive a signing bonus of $3.25 million and have an annual salary of $725,000, according to Lyft’s filing with the Securities and Exchange Commission on Monday. He confirmed to MarketWatch that he intends to donate $3 million of that signing bonus to Worldreader.

“I told the board it’s very important to me that Worldreader become stronger instead of becoming weaker,” Risher said.

Risher is also active in efforts to encourage wealthy philanthropists to give away their money faster. He and his wife, Jennifer Risher, launched a group called Half My DAF in 2020 that aims to move money out of donor-advised funds and into the hands of working charities more quickly.

“My wife and I do that on the side,” Risher said. “For a long time, I’ve been a purpose-driven leader. But Lyft is my No. 1 focus.”

Before leading Worldreader, Risher was an early employee of Amazon.com Inc.
AMZN,
-0.09%,
becoming its first head of product and head of U.S. retail, as well as a general manager at Microsoft Corp.
MSFT,
-1.49%.
He said that experience gives him an “understanding of competition.”

He said Lyft will compete by focusing on customers and drivers, such as making sure drivers are picking up customers on time. He said there won’t be much difference in the company’s stance on treating drivers as independent contractors when he takes over.

Lyft, like Uber, has been under pressure from investors to become profitable. The way to get there is through making sure to address it from both the “cost side and the volume side,” Risher said.

Risher officially takes the helm on April 17. Like Green, co-founder and President John Zimmer also will relinquish a role in day-to-day operations, but will continue as vice chair of the board.

MarketWatch staff writer Leslie Albrecht contributed to this article.

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March 27, 2023
Lyft brings in new CEO, pushing co-founders from helm after stock’s plunge

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Lyft Inc. is bringing in a new chief executive and removing its co-founders from running the ride-hailing company on a day-to-day basis, sending shares more than 3% higher in after-hours trading Monday.

Lyft
LYFT,
-2.74%
announced after markets closed Monday that board member David Risher will take over as CEO, replacing co-founder Logan Green. Green and Lyft’s other active co-founder — John Zimmer, who had been serving as president — will remain on the company’s board as chair and vice chair respectively, but not actively participate in running the company.

“I’m honored and humbled that Logan, John, and the board have trusted me to lead Lyft,” Risher said in a letter to employees. “And I’ll start by saying this: I want Lyft to lead, and I’m thrilled to lead Lyft.”

Risher worked at Microsoft Corp.
MSFT,
-1.49%
in the 1990s before becoming employee No. 37 at Amazon.com Inc.
AMZN,
-0.09%,
according to Lyft’s announcement, which noted that he received a permanent thank you on the Amazon website from founder and former chief executive Jeff Bezos upon his departure in 2002. For the past 13 years, he has been in charge of a nonprofit focused on childhood literacy called Worldreader.

“Across all three organizations, I learned of the power of leading with purpose,” he wrote to employees. “Each organization derived tremendous energy through a singleness of purpose. It’s what attracted and retained great people, allowed us to make focused decisions and inspired our customers.”

In an interview with The Wall Street Journal, Risher — who has been on Lyft’s board since 2021 — admitted that Lyft faces competitive issues, seemingly referencing Uber Technologies Inc.
UBER,
-0.42%.
He mentioned “a very aggressive — very aggressive — competitor,” while adding, “I think being a strong No. 2 is a good place to be.”

Lyft shares lost more than a third of their value in a single session in February after Green and Zimmer provided a forecast that missed expectations in what one analyst called “a debacle for the ages.” Monday’s announcement reiterated Lyft’s first-quarter guidance and said Lyft expects to report quarterly results in early May.

D.A. Davidson analyst Tom White told MarketWatch on Monday afternoon that the change at the top could be “a potential model positive.”

“A new leader with broader range of experiences could signal increased willingness to broaden Lyft’s strategic aperture a bit as it relates to other possible adjacent products (delivery?), partners, or ways to create value,” he wrote in an email.

Green and Zimmer began developing the company nearly 15 years ago, and launched the service in 2012, according to their separate letters to employees. They have jointly led the company since, including through a 2019 initial public offering that gave them special shares with stronger voting power.

From 2019: 5 things to know about the Lyft IPO

“To say I have loved leading Lyft is an understatement,” Green wrote in his letter to employees. “To say that I will miss working alongside you and this incredible team every day doesn’t even come close. This was an adventure of a lifetime, and I’ve loved every minute of it — the sweetness of the highs, and the pain of the lows that make you appreciate the next win that much more. I’m eternally grateful to this team.”

Lyft shares sold for $72 in its IPO, and closed Monday at $9.60 before moving closer to $10 in the extended session. Lyft stock has plummeted nearly 75% in the past 12 months, dropping 74.4% as the S&P 500 index
SPX,
+0.16%
has declined 12.6%.

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March 27, 2023
Roku says it ‘does not know’ how much of its cash it will be able to recover from SVB

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Streaming platform Roku Inc.
ROKU,
-0.88%
on Friday said it “does not know” to what extent it would be able to recover the cash it has deposited with the recently-failed Silicon Valley Bank. Roku said it had cash and cash equivalents of around $1.9 billion as of Friday, with around $487 million — or roughly 26% — at the bank. Roku said its deposits with SVB were “largely uninsured.” Shares fell 3.7% after hours.

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March 10, 2023
Asana stock soars 24% as software company says path to profitability is improving

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Asana Inc. on Wednesday reported and forecast narrower-than-expected losses, saying the figures reflected a firmer path to profitability, and its stock skyrocketed in after-hours trading.

The project-management software provider — whose chief executive is a co-founder of Meta Platforms Inc.’s
META,
+0.25%
Facebook — forecast first-quarter sales of $150 million to $151 million, with an adjusted net loss of between 18 cents and 19 cents a share. That’s better than FactSet forecasts for a 23-cent per-share loss with revenue of $150.4 million.

For the full year, Asana
ASAN,
+1.83%
said it expects revenue of between $638 million and $648 million, with an adjusted net loss of 55 cents to 59 cents. Analysts polled by FactSet expected a 79 cent-per-share loss, on sales of $645.8 million.

The company reported a fourth-quarter net loss of $95 million, or 44 cents a share. That compares with a loss of $90 million, or 48 cents a share, in the same quarter last year. Revenue rose 34% to $150.2 million, compared with $111.9 million in the same quarter last year.

Adjusted for stock-based compensation, restructuring and other costs, Asana lost 15 cents a share, compared with 25 cents a year earlier.

Analysts polled by FactSet expected Asana to reported an adjusted loss of 27 cents a share, on revenue of $145.1 million.

Shares soared 24% after hours.

The company reported earnings as other workplace-oriented cloud-services platforms, like Salesforce Inc.
CRM,
-0.20%
and Workday
WDAY,
-1.69%,
scale back and lay off workers. The tech industry has tried to shrink, after hiring to meet digital demand brought by the pandemic that later fizzled as COVID restrictions lifted.

Shares of Asana have fallen 60% over the past two months. By comparison, the S&P 500 Index
SPX,
+0.14%
has lost 4.3% of its value over that period.

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March 8, 2023
Robinhood accidentally sold short on a meme stock and lost $57 million

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Robinhood Markets Inc. accidentally sold short on a small stock as it went on a meme-like ride in December, costing the trading app more than the stock’s current market capitalization, executives disclosed Wednesday.

Cosmos Health Inc.
COSM,
+0.80%
shares nearly tripled and experienced record trading volume more than seven times any previous day on Dec. 16, as online traders looking for heavily shorted companies accused exchanges of not allowing them to sell their shares into the updraft. Robinhood
HOOD,
-0.76%
executives admitted Wednesday that their trading app actually became part of the frenzy, and ended up down $57 million because of it.

In an earnings call, Robinhood Chief Executive Vlad Tenev noted a “processing error on a corporate action” that was “really disappointing,” leaving Chief Financial Officer Jason Warnick to spell it out.

“A processing error caused us to sell shares short into the market, and although it was detected quickly, it resulted in a loss of $57 million as we bought back these shares against a rising stock price,” Warnick said.

When Cosmos Health effected a 1-for-25 reverse stock split that Friday morning in December, just hours after announcing its intentions, trading portals did not appear prepared. As MarketWatch reported on the day, TD Ameritrade publicly told Twitter users that the company had not received the newly issued shares to dole out to their clients as the stock spiked. A Charles Schwab Corp.
SCHW,
-0.71%
spokesperson emailed MarketWatch the next week to say that the distributions were all taken care of as of the end of the next business day, a Monday.

The stock gains didn’t last through that Monday, though — after reaching as high as $23.84 on the day that Robinhood was apparently buying, they lost it all in after-hours trading and headed even lower after Cosmos Health announced an equity offering.

Shares closed Wednesday at $5.04, which gives Cosmos Health a market cap of about $53 million, according to FactSet — less than Robinhood executives said they lost on the Dec. 16 trades.

Robinhood shares were up in after-hours trading Wednesday after the trading app reported a fourth-quarter miss, but said the company would seek to buy back shares sold to disgraced cryptocurrency-exchange founder Sam Bankman-Fried and executives would forego $500 million in stock compensation. Robinhood stock has declined 21.8% in the past 12 months, as the S&P 500 index
SPX,
-1.11%
has dropped 8.9%.

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February 8, 2023
Google suffered ‘pullback’ in ad spending over holidays, Alphabet stock falls after earnings

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Alphabet Inc.’s stock slipped nearly 5% in extended trading Thursday after the tech giant missed slightly on revenue and earnings in ho-hum quarterly results.

Google’s parent company reported fiscal fourth-quarter total revenue of $76.05 billion, up from $75.3 billion a year ago. Earnings were $13.62 billion, or $1.05 per share, compared with $20.64 billion, or $1.53 per share, last year. Alphabet’s revenue, minus traffic-acquisition costs (TAC), was $63.12 billion, vs. $61.9 billion a year ago.

“We’re on an important journey to re-engineer our cost structure in a durable way and to build financially sustainable, vibrant, growing businesses across Alphabet,” Chief Executive Sundar Pichai said in a statement announcing the results. The company recently announced 12,000 layoffs and has scaled back hires.

In a conference call later with analysts, Google Chief Business Officer Philipp Schindler said a “pullback” in spending by advertisers amid a more challenging economy as well as foreign-exchange headwinds impacted sales.

Analysts polled by FactSet expected Alphabet
GOOG,
+7.27%

GOOGL,
+7.28%
to report total revenue of $76.2 billion and earnings of $1.18 per share, with sales expected to be in line with last year’s results and profit declining from the holiday season a year ago. Revenue, minus TAC, were modeled at $63.2 billion, which also suggests little to no growth from last year.

Google’s total advertising sales slid to $59 billion from $61.2 billion a year ago, missing analysts’ average expectations of $60.44 billion. Google Cloud brought in $7.32 billion, compared with $5.54 billion last year. YouTube ad sales slipped to $7.96 billion from $8.63 billion a year ago.

“The search giant underperformed our expectations across almost all business units, most importantly its core ad-search segment,” Jesse Cohen, senior analyst at Investing.com, said. “Once again, YouTube growth slowed to a crawl amid tough competition from TikTok and other players in the video-streaming space.”

A dip in digital advertising has defined the past few quarters for Google, Meta Platforms Inc.
META,
+23.28%,
Snap Inc.
SNAP,
+9.93%,
Pinterest Inc.
PINS,
+8.99%
and other companies dependent on ads. Meta’s better-than-expected quarterly report Wednesday was a sign of encouragement after Snap had another desultory quarterly performance.

Indeed, Alphabet shares closed up 7% in Thursday’s regular session, at $107.74, before retreating 5% in after-hours trading.

Read more: Alphabet earnings: What to expect from the Google parent company

“After Alphabet’s advertising revenue cycle reached peak growth” in the second quarter of 2021, revenue for this part of the business is set to decelerate for the sixth quarter in a row, said Monness, Crespi, Hardt analyst Brian White, who forecast a 3% drop in the recently completed quarter.

On Thursday, Alphabet Chief Financial Officer Ruth Porat said that beginning in
the current quarter, AI subsidiary DeepMind will be included in Alphabet’s corporate costs rather than in Other Bets.

Alphabet’s stock has declined 24.7% over the past 12 months. The S&P 500 index
SPX,
+1.47%
is down 6.7% over the past year.

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February 2, 2023
Amazon stock falls as least profitable holiday quarter since 2014 leads to its worst annual loss on record

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Amazon.com Inc. reported its least profitable holiday quarter since 2014 on Thursday, leading to the biggest annual loss on record for the e-commerce giant, which also disappointed Wall Street with its forecast amid concerns about cloud growth.

Amazon
AMZN,
+7.38%
reported a holiday profit of $278 million, or 3 cents a share, down from $1.39 a share a year ago. Revenue increased to $149.2 billion from $137.41 billion a year ago. Analysts on average were expecting earnings of 17 cents a share on sales of $145.71 billion, according to FactSet.

Shares fell 5% in after-hours trading following the release of the results, after closing with a 7.4% increase at $112.91.

“In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon,” Chief Executive Andy Jassy said in a statement.

Amazon was expected to post a loss for the whole year for the first time since 2014, but worse-than-expected holiday earnings actually led Amazon to the company’s worst annual loss on record. For the year, Amazon produced a net loss of $2.7 billion and revenue of $513.98 billion, up from $469.82 billion a year ago and the company’s first annual sales total to surpass a half-billion dollars. Amazon had never lost more than $1.4 billion in a single year since going public in 1997, according to FactSet records.

Amazon’s fourth-quarter profit was hindered again by the decline of Rivian Automotive Inc.
RIVN,
+5.94%
stock, which cost Amazon $2.3 billion in net income in the quarter. In addition, Amazon recognized many of the costs of its recently announced layoffs and other cost cuts in fourth-quarter results as well — a $2.7 billion impairment charge included $640 million in severance charges related to layoffs and $720 million related to closures and impairment of physical stores, Chief Financial Officer Brian Olsavsky said in a call with reporters.

Without those charges, Amazon would have exceeded expectations, and recognizing them in 2022 leaves a cleaner sheet for this year, when Amazon’s ability to return to strong profitability will be the focus of Wall Street. The end result will likely rest on Amazon Web Services, or AWS, the cloud-computing offering that has supplied the bulk of Amazon’s profit in recent years, including 2022. Last year, AWS had operating profit of $22.84 billion, while the rest of the business produced an operating loss of $10.59 billion.

But cloud-computing growth has slowed, as Microsoft Corp.
MSFT,
+4.69%
displayed in its results and forecast last week, and Olsavsky confirmed the slowdown Thursday after AWS results missed expectations and suggested revenue growth had slowed to mid-teens and could stay there.

“Starting back in the middle of the third quarter of 2022, we saw our year-over-year growth rates slow as enterprises of all sizes evaluated ways to optimize their cloud spending in response to the tough macroeconomic conditions,” he said in a conference call with analysts. “As expected, these optimization efforts continued into the fourth quarter.”

Olsavsky told reporters he expected “slower growth rates for the next few quarters” for AWS, and later disclosed to analysts that revenue growth was in the mid-teens in the first month of this year. He noted that AWS revenue growth rates had been hit by customers looking to cut their cloud spending, and “we expect these optimization efforts will continue to be a headwind to AWS growth in at least the next couple of quarters.”

Opinion: The cloud boom has hit its stormiest moment yet, and it is costing investors billions

Making his first appearance on an earnings call since being named CEO two years ago, Jassy — who led AWS before being promoted to replace Jeff Bezos as CEO — said “if it’s good for our customers to find a way to be more cost effective in an uncertain economy, our team is going to spend a lot of cycles doing that.”

“We’re the only ones that really break out our cloud numbers in a more specific way, so it’s always a little bit hard to answer your question about what we see,” Jassy said to an analyst asking about the larger cloud industry, while referencing rival Microsoft’s refusal to provide full financial information about Azure. “But to our best estimations, when we look at the absolute dollar growth year over year, we still have significantly more absolute dollar growth than anybody else we see in this space.”

In the fourth quarter, AWS produced operating income of $5.21 billion on revenue of $21.38 billion, with sales growing more than 20% and operating income declining slightly. Analysts on average were expecting profit of $5.73 billion on sales of $21.85 billion, according to FactSet.

Any slowdown in AWS would hit Amazon’s bottom line as well as its overall top line, and executives’ forecast for the first quarter shows less optimism than Wall Street expected. Amazon’s guidance calls for operating profit of break-even to $4 billion and revenue of $121 billion to $126 billion, while FactSet recorded an average analyst forecast of $4.04 billion in operating profit on sales of $125.09 billion.

Amazon’s e-commerce business has struggled for growth amid the worst inflation in decades, with Olsavsky saying in a call with reporters that Amazon “saw customers spend less on discretionary items… [while] continuing to spend on everyday essentials.” Amazon recently announced it would start charging for grocery delivery for Prime members, which could increase revenue from sales of fresh food.

For more: Amazon Fresh to start charging Prime customers up to $10 for grocery deliveries

Amazon’s domestic e-commerce business posted an operating loss of $240 million on sales of $93.36 billion, after a $206 million loss on sales of $82.36 billion in the holiday quarter of 2021. Olsavsky said cuts in the company’s physical stores and device businesses would improve operating margins in North America.

Amazon’s international efforts struggled more, with a sales decline and increasing losses, as Olsavsky said the U.K. and other parts of Europe showed slowdowns. Amazon reported an operating loss of $2.23 billion on revenue of $34.46 billion overseas, after a loss of $1.63 billion on sales of $37.27 billion a year ago.

One bright spot in Amazon’s report was a record quarter for its advertising business, which has grown fast in recent years in a challenge to Alphabet Inc.’s
GOOGL,
+7.28%
GOOG,
+7.27%
Google and other online ad giants. Ads brought in $11.56 billion in the holiday quarter, growing nearly 19% from $9.71 billion a year ago and beating the analysts’ consensus.

Amazon stock has fallen more than 25% over the past 12 months, but has experienced a rebound so far in 2023, gaining more than 33% year to date. The S&P 500 index
SPX,
+1.47%
has declined 10.2% in the past year while gaining 7.3% since the calendar flipped to 2023.

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February 2, 2023
Meta stock spikes nearly 20% as cost cuts and $40 billion for investors overshadow earnings miss

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Meta Platforms Inc. shares soared in after-hours trading Wednesday despite an earnings miss, as the Facebook parent company guided for potentially more revenue than Wall Street expected in the new year and promised more share repurchases amid cost cuts.

Meta
META,
+2.79%
said it hauled in $32.17 billion in fourth-quarter revenue, down from $33.67 billion a year ago but stronger than expectations. Earnings were $4.65 billion, or $1.76 a share, compared with $10.3 billion, or $3.67 a share, last year.

Analysts polled by FactSet expected Meta to post fourth-quarter revenue of $31.55 billion on earnings of $2.26 a share, and the beat on sales coincided with a revenue forecast that also met or exceeded expectations. Facebook Chief Financial Officer Susan Li projected first-quarter sales of $26 billion to $28.5 billion, while analysts on average were projecting first-quarter sales of $27.2 billion.

Shares jumped more than 19% in after-hours trading immediately following the release of the results, after closing with a 2.8% gain at $153.12.

Alphabet Inc.’s
GOOGL,
+1.61%

GOOG,
+1.56%
Google and Pinterest Inc.
PINS,
+1.56%
benefited from Meta’s results, with shares for each company rising more than 4% in extended trading Wednesday.

“Our community continues to grow and I’m pleased with the strong engagement across our apps. Facebook just reached the milestone of 2 billion daily actives,” Meta Chief Executive Mark Zuckerberg said in a statement announcing the results. “The progress we’re making on our AI discovery engine and Reels are major drivers of this. Beyond this, our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization.”

Read more: Snap suffers worst sales growth yet in holiday quarter, stock plunges after earnings miss

Facebook’s 2 billion-user milestone was slightly better than analysts expected for user growth on Meta’s core social network. Daily active users across all of Facebook’s apps neared, but did not crest, another round number, reaching 2.96 billion, up 5% from a year ago.

Meta has been navigating choppy ad waters as it copes with increasing competition from TikTok and fallout from changes in Apple Inc.’s
AAPL,
+0.79%
ad-tracking system in 2021 that punitively harmed Meta, costing it potentially billions of dollars in advertising sales. Meta has invested heavily in artificial-intelligence tools to rev up its ad-targeting systems and making better recommendations for users of its short-video product Reels, but it laid off thousands of workers after profit and revenue shrunk in recent quarters.

The cost cuts seemed to pay off Wednesday. While Facebook missed on its earnings, it noted that the costs of its layoffs and other restructuring totaled $4.2 billion and reduced the number by roughly $1.24 a share.

Meta executives said they now expect operating expenses to be $89 billion to $95 billion this year based on slower salary growth, cost of revenue, and $1 billion in savings from facilities consolidation — down from previous guidance for $94 billion to $100 billion. Capital expenditures are expected to be $30 billion to $33 billion, down from previous guidance of $34 billion to $37 billion, as Meta cancels multiple data-center projects.

In a conference call with analysts late Wednesday, Zuckerberg called 2023 the “year of efficiency” after 18 years of unbridled growth. He recommitted to Meta’s emphasis on AI and the metaverse, a platform for “better social experiences” than the phone, he said.

“The reduced outlook reflects our updated plans for lower data-center construction spend in 2023 as we shift to a new data-center architecture that is more cost efficient and can support both AI and non-AI workloads,” Li said in her outlook commentary included in the release.

Meta expects to increase its spending on its own stock. The company’s board approved a $40 billion increase in its share-repurchase authorization; Meta spent nearly $28 billion on its own shares in 2022, and still had nearly $11 billion available for buybacks before that increase.

“Investors are cheering Meta’s plans to return more capital to shareholders despite worries over rising costs related to its metaverse spending,” said Jesse Cohen, senior analyst at Investing.com.

“At first glance…Meta getting its mojo back,” Baird Equity Research analyst Colin Sebastian said in a note late Wednesday. “Results and guidance look particularly solid after Snap’s dismal report; however, further cuts to operating and capital expenditures announced this afternoon were perhaps the biggest surprise.”

UBS analyst Lloyd Walmsley said he anticipates double-digit revenue growth exiting 2023 and strong growth in earnings and free cash flow.

The results came a day after Snap Inc.
SNAP,
-10.29%
posted fourth-quarter revenue of $1.3 billion, flat from a year ago and the worst year-over-year sales growth Snap has ever reported. But they also arrived on the same day Facebook scored a major win in a California court. The company successfully fended off the Federal Trade Commission bid to win a preliminary injunction to block Meta’s planned acquisition of VR startup Within Unlimited.

Read more: Meta wins bid to buy VR startup Within Unlimited, beating U.S. FTC in court: report

Meta shares have plunged 53% over the past 12 months, while the broader S&P 500 index
SPX,
+1.05%
has tumbled 10% the past year.

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February 1, 2023
Amazon gets 3 more warehouse-safety citations as OSHA warns company to ‘take these injuries seriously’

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The federal government on Wednesday hit Amazon.com Inc. with worker-safety related citations and penalties at three more warehouses, two weeks after issuing citations at the company’s warehouses in three different states.

The latest citations are the result of the Occupational Safety and Health Administration’s investigation of Amazon
AMZN,
+1.96%
warehouses stemming from referrals from the U.S. Attorney’s Office for the Southern District of New York. At all six locations, OSHA investigators cited the company for exposing warehouse workers to a high risk of low back injuries and other musculoskeletal disorders and asked for a multitude of changes and corrections.

“Amazon’s operating methods are creating hazardous work conditions and processes, leading to serious worker injuries,” said OSHA Assistant Secretary Doug Parker in a statement Wednesday. “They need to take these injuries seriously and implement a company-wide strategy to protect their employees from these well-known and preventable hazards.”

See: Amazon cited for warehouse working conditions ‘designed for speed but not safety’

The newest citations come from investigations into Amazon warehouses in Aurora, Colo.; Nampa, Idaho; and Castleton, N.Y. At all three sites, OSHA inspectors concluded that workers are suffering from musculoskeletal injuries “as a result of lifting heavy items while attempting to meet pace of work and production quotas,” according to each of the hazard letters that were sent to those warehouses’ operations managers. Those concerns were similar to those raised by OSHA at the three other Amazon warehouses in Florida, Illinois and a different warehouse in New York a couple of weeks ago.

In Aurora and Nampa, inspectors also found evidence that injuries may not have been reported because Amazon’s on-site first-aid clinic “was not staffed appropriately.” In Castleton, staffers at the company’s on-site clinic, known as AmCare, “question whether workers are actually injured, pressure injured workers to work through their injuries, and steer injured workers to Amazon-preferred doctors,” Rita Young, OSHA area director, wrote in the hazard letter.

The penalties associated with the citations at the three sites total $46,875. OSHA also asked Amazon to detail the changes it makes in response, and said the company’s response will determine whether more evaluation is needed. In addition, the agency’s inspectors may do follow-up visits within the next six months.

Just like with the first three citations, Amazon intends to appeal.

“We take the safety and health of our employees very seriously, and we don’t believe the government’s allegations reflect the reality of safety at our sites,” Amazon spokeswoman Kelly Nantel said in an emailed statement.

A company spokeswoman also referred to several safety-related efforts by the company, including its partnership with the National Safety Council; equipment that’s supposed to help reduce the need for twisting, bending and reaching; and “process improvements” designed by Amazon’s robotics team.

In anticipation of Wednesday’s OSHA citations, a group of worker advocates held a virtual news conference Tuesday. Among the panelists was Debbie Berkowitz, a former chief of staff at OSHA and now a fellow at the Kalmanovitz Initiative for Labor and the Working Poor at Georgetown University.

“I want to make it clear to everybody that these OSHA citations are incredibly historic and significant,” Berkowitz said. “Don’t get thrown by the low amount of penalties,” she added, saying the Occupational Safety and Health Act is a “weak law.”

She went on to say that “OSHA really grounded their investigations using doctors, experts, and what to do to mitigate the hazards… They show that Amazon needs to take action.”

Also present on the news conference was Amazon warehouse worker Jennifer Crane, from St. Peters, Mo.

“I’m glad to see OSHA investigate the safety crisis at Amazon,” she said. “The company blames us for getting injured. They push us to work at unrealistic speeds.”

Also: As Amazon shareholders call for audit of warehouse working conditions, report finds more than double the rate of injuries than at other warehouses

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February 1, 2023
Snap suffers worst sales growth yet in holiday quarter, stock plunges after earnings miss

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Snap Inc. stumbled through another bleak quarter to end 2022 and executives refused to provide guidance Tuesday, sending shares sliding.

In a potential barometer of what’s to come from advertising-dependent internet companies, Snap SNAP on Tuesday posted a loss of more than a quarter-billion dollars in the holiday quarter and declined to provide a forecast for the current quarter, which is likely to rattle investors in Meta Platforms Inc. META and Alphabet Inc.’s GOOGL GOOG Google, both of which report financial results later…

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January 31, 2023
These 20 stocks led the January rally

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The initial version of this story had incorrect price changes for 2023. It is now updated with information as of the market close on Jan. 31.

Investors staged a January rally, with solid gains for the S&P 500 and an even better showing for technology stocks that led the dismal downward action in 2022.

This…

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January 31, 2023
Could Big Tech layoffs keep growing? Apple, Amazon, Facebook and Google may give hints in biggest week of earnings.

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In the biggest week of the holiday-earnings season, Big Tech results will receive the spotlight amid thousands of layoffs that could only be the beginning.

After tech stocks were decimated in 2022, investors will be looking for signs of a turnaround in holiday reports and potential forecasts for the year ahead from three of 2022’s top five market-value losers: Amazon.com Inc.
AMZN,
-0.66%,
Apple Inc.
AAPL,
-0.63%
and Meta Platforms Inc.
META,
-0.60%.
The other two stocks on that list — Microsoft Corp.
MSFT,
-1.38%
and Tesla Inc.
TSLA,
-0.15%
— reported last week, and Microsoft’s results in the wake of a mass-layoffs announcement did not bode well for its Big Tech brethren.

See also: Microsoft could be the cloud sector’s ‘canary in the coal mine’

Those companies — along with Google parent Alphabet Inc.
GOOGL,
-1.32%
GOOG,
-1.49%
— will deliver results after finding themselves in unfamiliar territory: A backdrop of layoffs amid slowing demand for core products like digital ads, electronics and e-commerce, after a two-year pandemic surge and a two-decade-plus honeymoon with investors. Some analysts say the bottom hasn’t arrived, for either their finances or their workforces.

The one Big Tech company that hasn’t taken a sword to its payroll is Apple, which also increased its staff the least among the group during the COVID-19 pandemic. Apple shed $846 billion from its market cap last year, and now reports after its core product was part of the smartphone industry’s worst year since 2013 and worst holiday-season decline on record. The iPhone maker could also face questions from Wall Street about changing up its product sourcing, which has relied heavily on China, a nation whose COVID-19 restrictions have constrained production of some phones.

While the tech-industry layoffs have yet to hit Apple, some analysts say the company is unlikely to be spared, despite Chief Executive Tim Cook requesting and receiving a healthy cut to his compensation.

“Similar to other big technology companies, we expect Apple to adjust its head count to reflect an increasingly challenging global macroeconomic environment,” D.A. Davidson analyst Tom Forte said in a research note Tuesday.

Rivals that have already cut could face more if profit continues to fall along with revenue growth. Alphabet, for instance, is cutting 12,000 employees, but an activist investor has already said that is not enough considering how much the company grew during the pandemic, and the difficulties it now faces in the online-ad sector.

Opinion: Microsoft’s big move in AI does not mean it will challenge Google in search

Analysts have said Meta’s “darkest days” are still ahead, as it navigates a round of more than 11,000 layoffs, competition from TikTok and its early stumbles in the metaverse. While cutting, Chief Executive Mark Zuckerberg has promised to keep spending on metaverse development, even as the efforts slash the Facebook parent company’s previously healthy bottom line.

“In 2023, we expect Meta to remain engulfed in arduous battles inside the Octagon,” Monness Crespi Hardt analyst Brian White said in a research note on Thursday. “In the long run, we believe Meta will benefit from the secular digital ad trend and innovate in the metaverse; however, regulatory scrutiny persists, internal headwinds remain, and we believe the darkest days of this downturn are ahead of us.”

Full Facebook earnings preview: Meta’s ‘darkest days’ are ahead, but some analysts say ad sales are still on track

Online retailer Amazon
AMZN,
-0.66%
was the first Big Tech company to publicly declare cost-cutting was in order a year ago, and still coughed up $834 billion in market value in 2022. It kicked off 2023 with plans to lay off more than 18,000 workers as struggles continued throughout last year, when inflation siphoned away more consumer dollars toward essentials.

Amazon’s own AWS cloud-infrastructure unit has helped to drive sales in years past, as businesses built out their tech infrastructures. But remarks and the outlook from Microsoft executives — the third-biggest market-cap loser of 2022, and a big barometer for tech spending overall — weren’t exactly encouraging for cloud growth: Executives there last week warned of “moderating consumption growth” for its own cloud business.

For more: One company could determine whether U.S. corporate profits rise to a record in 2023

“Sentiment was already bearish on AWS, with investors looking for slowing revenue over the next three quarters, largely confirmed after Microsoft earnings and conversations with industry checks,” Oppenheimer analyst Jason Helfstein said in a note on Wednesday. “Positively, we believe e-commerce revenue has stabilized, and margins should improve from organic scale and announced head-count reductions.”

Layoffs are also starting to spread beyond Big Tech companies that grew fast during the pandemic in response to massive demand spikes. International Business Machines Corp.
IBM,
+0.76%
confirmed plans for 3,900 layoffs as it reported earnings, despite already reducing its workforce by at least 20% during the pandemic.

One sector to watch is semiconductors, where a chip shortage has turned into a glut: Chip-equipment maker Lam Research Corp.
LRCX,
+0.04%
announced layoffs in the past week as Silicon Valley semiconductor giant Intel Corp.
INTC,
+0.27%
displayed “astonishingly bad” results while laying off workers. When Intel rival Advanced Micro Devices Inc.
AMD,
-1.64%
reports this week, it could determine whether there is any silver lining in the semiconductor storm.

Earnings preview: AMD faces even more scrutiny after ‘astonishingly bad’ Intel outlook

Wedbush analyst Daniel Ives said in a Sunday note that a common theme of this week’s Big Tech earnings will be that “tech layoffs will accelerate with more pain ahead to curb expenses,” though he added that “Apple will likely cut some costs around the edges, but we do not expect mass layoffs from Cupertino this week.”

Big Tech earnings were a salve to other problems in the market for the past decade-plus, but with layoffs already under way and doubts about the path forward, don’t expect salvation from their results this week.

This week in earnings

For the week ahead, 107 S&P 500
SPX,
-0.19%
companies, including six members of the Dow Jones Industrial Average
DJIA,
+0.18%,
will report results, according to FactSet. While more Dow components reported last week, this will be the busiest week for S&P 500 holiday earnings of the season, FactSet senior earnings analyst John Butters confirmed to MarketWatch.

Appliance-maker Whirlpool Corp.
WHR,
+1.18%
reports on Monday, after it forecast fourth-quarter sales that were below expectations, following what it called a “one-off supply-chain disruption” and the pandemic home-renovation boom.

On Tuesday, package-deliverer United Parcel Service Inc.
UPS,
-0.26%
reports, amid questions about holiday-season demand. So does streaming service Spotify Technology,
SPOT,
-0.02%
following its own layoffs and suggestions of possible price hikes, as well as McDonald’s Corp.
MCD,
-0.30%,
amid concerns that rising prices are keeping people from dining out. Exxon Mobil Corp.
XOM,
-0.99%,
Caterpillar Inc.
CAT,
-0.12%,
Snap Inc.
SNAP,
+0.64%
and Pfizer Inc.
PFE,
+0.72%
also report Tuesday.

Earnings outlook: McDonald’s earnings haven’t been hit by higher prices

On Wednesday, T-Mobile US Inc.
TMUS,
+0.23%
reports, in the wake of a data breach and wobbling cellphone demand. Coffee chain Starbucks Corp.
SBUX,
-0.58%
reports on Thursday, with analysts likely to be zeroed in on U.S. demand and China’s reopening, after executives said they were confident that higher prices, along with enthusiasm from younger customers and for customizable drinks, could help them navigate any potholes in the economy.

For the Big Tech companies, Thursday is also the big day: Apple, Amazon and Alphabet will report that afternoon, after Meta reports the prior day.

The calls to put on your calendar

WWE upheaval: World Wrestling Entertainment Inc.
WWE,
+0.91%
reports earnings on Thursday, as Vince McMahon — who returned to the professional-wrestling organization this month following allegations of sexual misconduct — seeks a buyer or some other so-called “strategic alternative” for the company.

Analysts have speculated how the company’s wrestling events and backlog of media content might be repurposed, with some entertaining the possibility of interest from Amazon or Netflix Inc.
NFLX,
-0.39%.
But WWE has struggled to develop story lines that stick with viewers, and has thinned its ranks of wrestlers.

The Wall Street Journal this month reported that McMahon would pay a multimillion-dollar settlement to a former referee who accused him of raping her. Among the changes since McMahon returned was the departure of his daughter, who had been promoted to co-CEO after he stepped down from the role last year.

There isn’t much clarity on whether Vince McMahon will be on Thursday’s earnings call, which was moved from the morning to the afternoon due to a scheduling conflict. But it should offer drama no matter who attends.

The numbers to watch

GM and Ford auto sales: Auto makers General Motors Co.
GM,
-2.00%
and Ford Motor Co.
F,
-0.94%
will issue results on Tuesday and Thursday respectively, amid signs of waning demand and rising interest rates that have made car loans more expensive. Despite falling new-vehicle sales in the third quarter, GM managed to keep its own sales higher, the AP noted.

Mary Barry, GM’s chief executive, called out the popularity of vehicles like the Escalade, the Chevrolet Bolt EV and some pickups and SUVs during the auto maker’s third-quarter earnings call in October. During that quarter, GM said it completed and shipped nearly 75% of the unfinished vehicles held in its inventory in June. She said supply-chains were opening up again, but added that “short-term disruptions will continue to happen.”

The auto makers report as they try to put a chip shortage and other production constraints behind them. But some forecasts call for 2022 auto sales, or sales volumes, to be the weakest in roughly a decade. Electric vehicle maker Tesla’s recent price cuts could also cut into GM’s and Ford’s own EV sales.

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January 29, 2023
Facebook to allow Trump back on platform after 2-year ban

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Facebook parent Meta Platforms Inc. META will restore former President Donald Trump’s Facebook and Instagram accounts after the social-media platform banned him in the wake of the Jan. 6 riot at the U.S. Capitol in 2021.

The reinstatement of those accounts is set to happen “in the coming weeks,” Nick Clegg, Meta’s president of global affairs, said in a statement late Wednesday.

“As…

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January 25, 2023
Feds poised to file another antitrust suit against Google this week: report

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The U.S. Justice Department is preparing to sue Alphabet Inc. in the coming days over its dominance in the online ad market, according to a report late Monday.

Citing sources familiar with the matter, Bloomberg News reported the antitrust suit is expected to be filed in federal court before the end of this week, and as soon as Tuesday.

The pending filing has been rumored for months, after the Justice Department reportedly rejected concessions offered by Google last summer. A Google spokesperson declined to comment Monday.

Google dominates the online ad market, earning more than one-quarter of U.S. digital-advertising revenue, according to estimates from research firm Insider Intelligence Inc.

It would be the second antitrust suit filed by the Justice Department against Google parent Alphabet. In October 2020, the DOJ accused Google of being “a monopolist in the general search services, search advertising, and general search text advertising markets.” In a 2020 blog post, Google called that suit “deeply flawed” and said people use Google because they choose to, not because they are forced to. That case is set for trial in the fall.

Alphabet faces a number of other lawsuits targeting its business practices, including a $16.3 billion class-action suit filed in the U.K. in November accusing the tech giant of reaping “super profits” at the expense of thousands of smaller companies. Google called that lawsuit “speculative and opportunistic.”

Alphabet’s Class A shares
GOOGL,
+1.81%
are down 24% over the past 12 months while its Class C shares
GOOG,
+1.94%
have fallen about 22%, compared to the S&P 500’s
SPX,
+1.19%
9% dip over the past year. Both classes of Alphabet shares dipped nearly 1% in after-hours trading Monday after the Bloomberg report was published.

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January 23, 2023
Spotify to lay off nearly 600 employees

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After slowing its pace of hiring last year, Spotify Technology SA confirmed Monday that it was laying off employees, adding to the wave of jobs cuts sweeping across the tech industry.

The streaming music service disclosed in a filing with the Securities and Exchange Commission that it was reducing its workforce by about 6%, which translates to about 588 jobs.

Bloomberg News had originally reported over the weekend that the company was planning job cuts as soon as this week.

The Luxembourg-based company said it expects to record charges of EUR35 million to EUR45 million ($38.1 million to $48.9 million) related to severance payments.

Spotify’s U.S.-listed shares
SPOT,
+4.63%
rallied 4.4% toward a four-month high in premarket trading,

In October, Spotify laid off at least 38 employees at its Gimlet and Parcast podcast units. Last June, Spotify Chief Executive Daniel Ek told employees that the company would reduce hiring by 25%, according to Bloomberg and CNBC reports.

As of the end of its third quarter, Spotify had about 9,800 employees, according to its earnings report. More than 55,000 tech workers have been laid off so far in 2023, according to the website Layoffs.fyi, including 12,000 from Google parent Alphabet Inc., 10,000 from Microsoft Corp. and hundreds more from Intel Corp.

Stockholm-based Spotify has been pressured by massive spending on podcasts in recent years, which have yet to deliver profits and have weighed on margins. In June, Ek predicted a meaningful ramp in profitability within the next couple of years.

Separately, Spotify said Chief Content & Advertising Business Officer Dawn Ostroff will leave the company.

Spotify shares have sunk about 50% over the past 12 months, compared with the S&P 500’s
SPX,
+1.89%
10% decline over that time.

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January 23, 2023