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These 5 tech stocks could let you play earnings season like a pro
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Tag: Social Media Platforms/Tools
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Mark Zuckerberg could pay millions to the IRS on Meta dividends. He still might be getting ‘a major break’.
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Mark Zuckerberg delighted Meta shareholders and Wall Street this week with news of the social media giant’s first-ever dividend.
The IRS may also be happy, now that it’s staring at millions in taxes on the Meta stock dividends bound for Zuckerberg’s portfolio.
Zuckerberg, the CEO of Meta Platforms Inc.
META,
+20.32% ,
is poised to make $700 million in dividends yearly. He owns nearly 350 million shares, according to FactSet, and the company will start paying a quarterly dividend of 50 cents a share.That would yield nearly $167 million in federal taxes yearly, after a qualified-dividend tax of 20% and another 3.8% tax on the investment returns of rich households, two accounting experts said.
California income taxes of 13.3% on the dividends could cost Zuckerberg another $93.1 million, said Andrew Belnap, an accounting professor at the University of Texas at Austin’s McCombs School of Business.
All in, that’s a combined $259.7 million in federal and state taxes annually on the Meta dividends, Belnap estimated.
For context, U.S. taxpayers reported over $285 billion in qualified-dividend income to the IRS though mid-November 2023, according to agency statistics. Nearly 30 million tax returns reported qualified dividends through that time.
Meta said it plans a quarterly cash dividend going forward, with the first such payment in March.
Meta shares soared 20.5% on Friday, ending with a record-high close of $474.99. The Dow Jones Industrial Average
DJIA,
S&P 500
SPX
and Nasdaq Composite
COMP
all closed higher Friday.‘Zuck is getting a major break’
Meta announced the dividend payment in its earnings results Thursday, on the same week that Americans began filing their income taxes.
A look at Zuckerberg’s dividends and their tax implications offer a peek at the debate about the varying ways wages and wealth are taxed.
“Zuck is getting a major break,” said Andrew Schmidt, an accounting professor at North Carolina State University’s Poole School of Management who also crunched the numbers for MarketWatch.
Approximately $167 million “seems like a high tax bill,” he said. But if Zuckerberg received the $700 million as a straight salary, Schmidt estimated he’d be looking at a roughly $259 million tax bill on the wages after they were taxed at the top marginal rate of 37%.
Federal income tax brackets run from 10% to 37%.
Meanwhile, the IRS taxes qualified dividends and capital gains at 0%, 15% and 20%, depending on income and household status. The net investment income tax adds another 3.8% for individuals making at least $200,000 or married couples worth $250,000.
For federal and state taxes on the Meta dividends, Zuckerberg would face a combined rate of 37.1%, Belnap noted. “His tax rate on this is actually fairly high,” he said.
The gap in tax rates on income derived from wages and investments “has been a big criticism with U.S. tax policy,” Schmidt said, especially as lawmakers look for ways to come up with more tax revenue.
Regular retail investors enjoy the same preferential rates on capital gains and dividends as the top 1% of taxpayers, Schmidt added. The issue is that those dividends and stock profits are a smaller part of their income while salaries, taxed at higher rates, are a bigger proportion.
Belnap noted that California’s state tax rules don’t provide special treatment to dividends.
Zuckerberg received a $1 base salary in 2022, a figure that hasn’t changed in several years. He is now worth $142 billion, according to the Bloomberg Billionaires Index, making him the fifth-richest person in the world.
Meta did not immediately respond to a request for comment.
Taxes on the Meta dividends will not be something Zuckerberg, or any Meta shareholders big or small, need to deal with until next year’s tax season, Belnap and Schmidt observed.
But as taxpayers amass their 1099-DIV forms on dividend income, IRS figures show that it’s mostly upper-echelon taxpayers reaping the rewards on the preferential rates for qualified dividends.
Households worth at least $1 million accounted for 40% of the approximate $285.3 billion in qualified dividends reported through mid-November, according to agency figures.
For less affluent investors, “it’s usually a nice supplement, but I’d say very few people are living off dividends,” Belnap said.
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Meta’s stock is the most overbought in 11 years, but that could be a good thing
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There’s a common belief that “overbought” is a technical condition for a stock, but in practice it seems to be more of an ability.
Meta Platforms Inc.’s stock
META,
+20.32%
soared so much Friday after a blowout earnings report, that some technical readings have reached levels not seen in 11 years.The stock rocketed 20.9% to close at a record $474.99, to book the third-biggest gain since going public in May 2012. The only bigger rallies were 23.3% on Feb. 2, 2023 and 29.6% on July 25, 2013, which were also after earnings reports.
The stock’s Relative Strength Index, which is a momentum indicator that measures the magnitudes of recent gains and losses, climbed to 86.48. That’s the highest level seen since it closed at a record 89.39 on July 30, 2013.
But that shouldn’t scare off Meta bulls.
Many chart watchers believe RSI readings above 70 are signs of “overbought” conditions, which suggests bulls need a breather after running faster and farther than they are used to.
There are also many who believe the ability to become overbought is a sign of underlying strength, since a stock tends to be trending higher when RSI hurdles 70. (Read Constance Brown’s “Technical Analysis for the Trading Professional.”)
For example, the record RSI reading came three days after the record stock-price rally of 29.6% on July 25, 2013. Even though RSI closed at what was then a record of 88.27 after a record price gain on the 25th, the stock continued to rally and become even more overbought.
It was that spike that snapped the stock out of the year-long doldrum that followed the initial public offering, and flipped the long-term narrative on the stock to bullish. (Read “Facebook’s ‘breakaway gap’ is a bullish game changer,” from The Wall Street Journal.)
FactSet, MarketWatch
And while the record RSI readings in July 2013 did lead to a minor short-term pullback, it didn’t stop the stock from embarking on a long-term uptrend, in which RSI made multiple forays above 70.
FactSet, MarketWatch
And the last time RSI closed above 85 was Feb. 2, 2023, when it closed at 86.07, also after a blowout earnings report.
And similar to 10 years earlier, that historically high overbought reading helped launch another long-term rally.
FactSet, MarketWatch
So yes, Meta’s stock is now facing historically high overbought conditions. But as many chart watchers like to say, overbought doesn’t mean over.
One thing to consider, however, is that the two prior times RSI spiked above 85 were while the long-term fates of the stock were still in question — the stocks were working on short-term bounces following long-term downtrends.
FactSet, MarketWatch
But Friday’s blast off happened just days after the stock closed at a record high. There was no resistance to hurdle, so rather than a bullish “breakaway gap,” Friday’s jump could be considered more a bullish leap of faith.
Also read:
Meta’s killer stock rally could add $200 billion in market cap — a historic haul.
Nvidia’s stock could rise above $600 — despite signs it’s already overbought.
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So Long, Apple and Tesla. We Built a Better Magnificent 7.
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Jan 12, 2024, 1:00 am EST
[ad_2]In this articleThe Magnificent Seven had an extraordinary year in 2023—one that will be very difficult to repeat. And there will be a new Magnificent Seven in 2024.
Continue reading this article with a Barron’s subscription.
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Mark Zuckerberg sold $428 million of Meta stock in the last two months of 2023
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Mark Zuckerberg cashed in on his company’s 2023 stock rally in a big way — selling nearly $428 million worth of shares in Meta Platforms Inc. over the final two months of the year.
The Meta
META,
-0.53%
co-founder and chief executive offloaded just under 1.8 million shares over the course of every trading day between Nov. 1 and the end of last year, according to a regulatory filing with the U.S. Securities and Exchange Commission on Tuesday.The sales were in accordance with a Rule 10b5-1 trading plan adopted by Zuckerberg in July and saw him capitalize on Meta’s rebounding stock price, which soared 194.1% in 2023 — and nearly threefold since it hit a seven-year low in November 2022. By comparison, the S&P 500
SPX
and the Nasdaq Composite
COMP
indexes gained 24.2% and 43.4%, respectively, in 2023.The moves also broke a two-year hiatus, dating back to November 2021, during which Zuckerberg did not sell any of his stock in the Facebook parent company, according to Bloomberg, which first reported the news. Zuckerberg, who owns roughly 13% of Meta, is ranked the seventh-richest person in the world with a net worth of $125 billion, according to the Bloomberg Billionaires Index.
Nasdaq-listed Meta shares, which fell 0.5% on Wednesday to $344.47, are now roughly 11% off their all-time closing high of $382.18 from September 2021.
Representatives for Meta could not immediately be reached for comment.
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These 20 stocks soared the most in 2023
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(Updated with Friday’s closing prices.)
The 2023 rally for stocks in the U.S. accelerated as more investors bought the idea that the Federal Reserve succeeded in its effort to bring inflation to heel.
The S&P 500
SPX
ended Friday with a 24.2% gain for 2023, following a 19.4% decline in 2022. (All price changes in this article exclude dividends). Among the 500 stocks, 65% were up for 2023. Below is a list of the year’s 20 best performers in the benchmark index.This article focuses on large-cap stocks. MarketWatch Editor in Chief Mark DeCambre took a broader look at all U.S. stocks of companies with market capitalizations of at least $1 billion, to list 10 with gains ranging from 412% to 1,924%.
The Fed began raising short-term interest rates and pushing long-term rates higher in March 2022 by allowing its bond portfolio to run off. That explains the poor performance for stocks in 2022, as bonds and even bank accounts because more attractive to investors.
The central bank hasn’t raised the federal-funds rate since moving it to the current target range of 5.25% to 5.50% in July, and its economic projections point to three rate cuts in 2024.
Investors are anticipating the return to a low-rate environment by scooping up 10-year U.S. Treasury notes
BX:TMUBMUSD10Y,
whose yield ended the year at 3.88%, down from 4.84% on Oct. 27 — the day of the S&P 500’s low for the second half of 2023.Read: Treasury yields end mostly higher but little changed on year after wild 2023
Before looking at the list of best-performing stocks of 2023, here’s a summary of how the 11 sectors of the S&P 500 performed, with the full index and three more broad indexes at the bottom:
Sector or index 2023 price change 2022 price change Price change since end of 2021 Forward P/E Forward P/E at end of 2022 Forward P/E at end of 2023 Information Technology 56.4% -28.9% 11.5% 26.7 20.0 28.2 Communication Services 54.4% -40.4% -7.6% 17.4 14.3 21.0 Consumer Discretionary 41.0% -37.6% -11.4% 26.2 21.7 34.7 Industrials 16.0% -7.1% 8.0% 20.0 18.7 22.0 Materials 10.2% -14.1% -4.9% 19.5 15.8 16.6 Financials 9.9% -12.4% -3.4% 14.6 13.0 16.3 Real Estate 8.3% -28.4% -21.6% 18.3 16.9 24.7 Healthcare 0.3% -3.6% -3.3% 18.2 17.7 17.3 Consumer Staples -2.2% -3.2% -5.4% 19.3 20.6 21.4 Energy -4.8% 59.0% 51.8% 10.9 9.8 11.1 Utilities -10.2% -1.4% -11.4% 15.9 18.7 20.4 S&P 500
SPX24.2% -19.4% 0.4% 19.7 16.8 21.6 Dow Jones Industrial Average
DJIA13.7% -8.8% 3.8% 17.6 16.6 18.9 Nasdaq Composite
COMP43.4% -33.1% -3.5% 26.9 22.6 32.0 Nasdaq-100
NDX53.8% -33.0% 3.5% 26.3 20.9 30.3 Source: FactSet A look at 2023 price action really needs to encompass what took place in 2022 for context. The broad indexes haven’t moved much from their levels at the end of 2022 (again, excluding dividends). We have included current forward price-to-earnings ratios along with those at the end of 2021 and 2022. These valuations have declined a bit, which may provide some comfort for investors wondering how likely it is for stocks to continue to rally in 2024.
Biggest price increases among the S&P 500
Here are the 20 stocks in the S&P 500 whose prices rose the most in 2023:
Company Ticker 2023 price change 2022 price change Price change since end of 2021 Forward P/E Forward P/E at end of 2022 Forward P/E at end of 2021 Nvidia Corp. NVDA,
239% -50% 68% 24.9 34.4 58.0 Meta Platforms Inc. Class A META,
-1.22% 194% -64% 5% 20.2 14.7 23.5 Royal Caribbean Group RCL,
-0.37% 162% -36% 68% 14.3 14.9 232.4 Builders FirstSource Inc. BLDR,
-1.02% 157% -24% 95% 14.2 10.7 13.3 Uber Technologies Inc. UBER,
-2.49% 149% -41% 47% 56.9 N/A N/A Carnival Corp. CCL,
-0.70% 130% -60% -8% 18.7 41.3 N/A Advanced Micro Devices Inc. AMD,
-0.91% 128% -55% 2% 39.7 17.7 43.1 PulteGroup Inc. PHM,
-0.26% 127% -20% 81% 9.1 6.3 6.2 Palo Alto Networks Inc. PANW,
-0.24% 111% -25% 59% 50.2 38.0 70.1 Tesla Inc. TSLA,
-1.86% 102% -65% -29% 66.2 22.3 120.3 Broadcom Inc. AVGO,
-0.55% 100% -16% 68% 23.2 13.6 19.8 Salesforce Inc. CRM,
-0.92% 98% -48% 4% 28.0 23.8 53.5 Fair Isaac Corp. FICO,
-0.46% 94% 38% 168% 47.1 29.3 28.7 Arista Networks Inc. ANET,
-0.62% 94% -16% 64% 32.7 22.3 41.4 Intel Corp. INTC,
-0.28% 90% -49% -2% 26.6 14.6 13.9 Jabil Inc. JBL,
-0.45% 87% -3% 81% 13.5 7.9 10.3 Lam Research Corp. LRCX,
-0.81% 86% -42% 9% 25.2 13.5 20.2 ServiceNow Inc. NOW,
+0.57% 82% -40% 9% 56.0 42.6 90.1 Amazon.com Inc. AMZN,
-0.94% 81% -50% -9% 42.0 46.7 64.9 Monolithic Power Systems Inc. MPWR,
-0.23% 78% -28% 28% 49.1 27.3 57.9 Source: FactSet Click on the tickers for more about each company.
Don’t miss: Nvidia tops list of Wall Street’s 20 favorite stocks for 2024
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Musk Strategy to Contain Anti-Semitism Fallout Is to Go ‘Thermonuclear’
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[ad_2]Elon Musk employed an aggressive strategy—including the threat of a “thermonuclear” lawsuit— to contain the fallout after his endorsement of anti-Semitic rhetoric on X that prompted an advertising backlash at the billionaire’s social media company and some on Wall Street to call for his censure.
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Elon Musk’s X apocalyptic moment
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Is this the beginning of the end for X, the social-media site previously known as Twitter?
In the last two days, major advertisers, ranging from IBM Corp. IBM, Apple Inc. AAPL, Lions Gate Entertainment Corp. LGF.A, Walt Disney Co. DIS, even the European Union, have pulled their ads from X, after Elon Musk appeared to endorse antisemitic conspiracy theories and because these big spenders weren’t thrilled with the algorithm’s product placement nestled alongside pro-Nazi posts.
Earlier…
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IBM pulls ads from X after Elon Musk’s incendiary comments over white pride
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IBM Corp.
IBM,
+0.31%
has abruptly pulled ads from X, formerly Twitter, amid a maelstrom of controversial comments from billionaire owner Elon Musk and the placement of IBM ads.“IBM has zero tolerance for hate speech and discrimination and we have immediately suspended all advertising on X while we investigate this entirely unacceptable situation,” the company said in a statement emailed to MarketWatch.
IBM suspended advertising following a report by the Financial Times on Thursday that IBM ads appeared next to posts supporting Adolf Hitler and the Nazi Party. A Media Matters study also found ads from Apple Inc.
AAPL,
+0.90% ,
Oracle Corp.
ORCL,
+0.53% ,
and Comcast Corp.’s
CMCSA,
-0.28%
Xfinity and Bravo were adjacent to pro-Nazi content.On Wednesday, Musk agreed with a post on X supportive of an antisemitic conspiracy theory that Jewish people hold a “dialectical hatred” of white people. “You have said the actual truth,” Musk wrote in response to the post.
Compounding matters, Musk on Thursday said on X it was “super messed up” that white people are not, in the words of one far-right user’s tweet, “allowed to be proud of their race.”
Adding fuel to the fire, Musk said on Wednesday that the Jewish advocacy group the Anti-Defamation League “unjustly attacks the majority of the West, despite the majority of the West supporting the Jewish people and Israel.” (Musk has threatened to sue the ADL because of its criticism of lax moderation practices on X that it says have allowed antisemitism to spread.)
The cascading conflagration prompted Tesla Inc.
TSLA,
-3.81%
bull and investment adviser Ross Gerber to grumble on X: “Getting a flood of messages from clients wanting out of tesla and anything to do with Elon Musk. Many saying they are selling their cars as well. What is he doing to the tesla brand??!!?!?”Earlier this year, Gerber backed down from his “friendly activist” efforts to join Tesla’s board, saying he felt his concerns had been addressed. His firm, Gerber Kawasaki Wealth and Investment Management, has its own ETF, AdvisorShares Gerber Kawasaki
GK,
which has Tesla as its top investment, and has attracted many clients with Tesla shares in its portfoliosIn an interview on CNBC late Thursday, Gerber said that while he is not selling his Tesla stock, ” I’m not going to mince words about it anymore as a shareholder. It’s absolutely outrageous, his behavior and the damage he’s caused to the brand.”
Gerber said Musk has essentially abdicated his responsibilities as Tesla CEO: “It’s all about Twitter, and what he can tweet, and how many people he can piss off… What’s going to happen to Tesla over the next 10 years, are they gonna achieve their mission if the CEO isn’t actually the CEO? Because he’s certainly not acting as the CEO of Tesla.”
An X executive told MarketWatch that the company did a “sweep” of the accounts next to the IBM ads. Those accounts “will no longer be monetizable” and specific posts will be labeled “Sensitive Media.”
The executive said 99% of measured ad placements on X this year have appeared adjacent to content scoring “above the brand safety floor” criteria set by industry standards.
Late Thursday, X’s chief executive, Linda Yaccarino, tweeted: “X’s point of view has always been very clear that discrimination by everyone should STOP across the board — I think that’s something we can and should all agree on. When it comes to this platform — X has also been extremely clear about our efforts to combat antisemitism and discrimination. There’s no place for it anywhere in the world — it’s ugly and wrong. Full stop.”
The posts and ad placement come amid a wave of antisemitism on digital forums including X and a downturn in advertising on the platform linked to hate speech and misinformation. Musk said in July that ad revenue had plunged about 50%.
The latest kerfuffle is likely to complicate the efforts of Yaccarino, who was hired in June from Comcast Corp.’s
CMCSA,
-0.28%
NBCUniversal to sway advertising agencies and major brands to stay on, or initiate relationships with, the platform now known as X.Tesla shares fell nearly 4% on Thursday but are still up about 90% to date in 2023.
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Apple, Microsoft, Nvidia—What Tech Stocks Hedge Funds Are Buying and Selling
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[ad_2]It’s filing season for a string of major hedge funds, and big tech names like Apple, Microsoft, and Nvidia were among the most-traded equities in the third quarter.
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Meta’s Earnings Story Will Be a Good Ol’ Rebound in Ads
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Oct 25, 2023, 1:00 am EDT
In recent quarters, Meta Platforms CEO Mark Zuckerberg has been talking more about artificial intelligence and cost cutting, while focusing less and less on the company’s multibillion-dollar investment in the metaverse. Expect more of the same when the parent of Facebook, Instagram, WhatsApp, and Threads reports results after the close Wednesday.
Continue reading this article with a Barron’s subscription.
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Apple says it will fix app software problems blamed for making iPhone 15 models too hot to handle
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Apple Inc. is blaming a software bug and other issues tied to popular apps such as Instagram and Uber for causing its recently released iPhone 15 models to heat up and spark complaints about becoming too hot to handle.
The Cupertino, Calif., company
AAPL,
+0.30%
said Saturday that it is working on an update to the iOS17 system that powers the iPhone 15 lineup to prevent the devices from becoming uncomfortably hot and is working with apps that are running in ways “causing them to overload the system.”Instagram, owned by Meta Platforms
META,
-1.23% ,
modified its social media app earlier this week to prevent it from heating up the device on the latest iPhone operating system.Read: The Magnificent Seven could be considered the messy seven after a ‘meh’ third quarter
Uber
UBER,
-0.33%
and other apps such as the video game Asphalt 9 are still in the process of rolling out their updates, Apple said. It didn’t specify a timeline for when its own software fix would be issued but said no safety issues should prevent iPhone 15 owners from using their devices while awaiting the update.“We have identified a few conditions which can cause iPhone to run warmer than expected,” Apple in a short statement provided to The Associated Press after media reports detailed overheating complaints that are peppering online message boards.
The Wall Street Journal amplified the worries in a story citing the overheating problem in its own testing of the new iPhones, which went on sale a week ago.
Read: Here’s what Apple’s iPhone 15 says about the world
It’s not unusual for new iPhones to get uncomfortably warm during the first few days of use or when they are being restored with backup information stored in the cloud — issues that Apple already flags for users. The devices also can get hot when using apps such as video games and augmented reality technology that require a lot of processing power, but the heating issues with the iPhone 15 models have gone beyond those typical situations.
In its acknowledgement, Apple stressed that the trouble isn’t related to the sleek titanium casing that houses the high-end iPhone 15 Pro and iPhone 15 Pro Max instead of the stainless steel used on older smartphones.
Apple also dismissed speculation that the overheating problem in the new models might be tied to a shift from its proprietary Lightning charging cable to the more widely used USB-C port that allowed it to comply with a mandate issued by European regulators.
Although Apple expressed confidence that the overheating issue can be quickly fixed with the upcoming software updates, the problem still could dampen sales of its marquee product at time when the company has faced three consecutive quarters of year-over-year declines in overall sales.
The downturn has affected iPhone sales, which fell by a combined 4% in the nine months covered by Apple’s past three fiscal quarters compared with a year earlier.
Apple is trying to pump up its sales in part by raising the starting price for its top-of-the-line iPhone 15 Pro Max to $1,200, an increase of $100, or 9%, from last year’s comparable model.
Investor worries about Apple’s uncharacteristic sales funk already have wiped out more than $300 billion in shareholder wealth since the company’s market value closed at $3 trillion for the first time in late June.
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Sorry, Elon, a ‘super app’ is never going to fly in the U.S.
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“Super apps” have never truly existed in the United States, and it is apparent at this point that they never will.
That isn’t stopping some executives and investment analysts from still dreaming of becoming one-stop shops for their users’ needs, something only a small handful of apps in Asia have managed to do. The most prominent is Elon Musk, the Tesla Inc. TSLAchief executive who purchased Twitter last year and has proclaimed that he will turn it into an “everything app” called X that resembles super apps in China.
“I…
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‘Magnificent Seven’ stocks are losing some of their shine, but their bonds are doing fine
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The so-called Magnificent Seven grouping of technology stocks lost some of its luster this week after four of the seven moved into correction territory, meaning their stocks have fallen at least 10% from their recent peaks.
The corporate-bond market, in contrast, seems to like all seven names.
The group is made up of Facebook parent Meta Platforms Inc.
META,
-0.65% ,
Apple Inc.
AAPL,
+0.28% ,
Microsoft Corp.
MSFT,
-0.13% ,
Nvidia Corp.
NVDA,
-0.10% ,
Amazon. com Inc.
AMZN,
-0.57% ,
Google parent Alphabet Inc.
GOOGL,
-1.89% GOOG,
-1.80%
and Tesla Inc.
TSLA,
-1.70% .One caveat: Tesla has no outstanding bonds. In the past, the electric-car maker issued convertible bonds, but they have all been converted into equity.
The group is credited with helping drive the stock market’s gains in the first half of the year, driven by excitement about artificial intelligence. But the rally has stalled in recent weeks as investors have fretted over the potential for U.S. interest-rate increases, surging Treasury yields and China worries, with property developer Evergrande filing for U.S. bankruptcy protection late Thursday.
On Thursday, Meta followed Apple, Microsoft and Nvidia into correction territory, as MarketWatch’s Emily Bary reported. Tesla, meanwhile, is in a bear market, meaning it’s down more than 20% from its recent peak.
Read: Have AI stocks like Nvidia reached bubble territory? Here’s what history can tell us.
The following series of charts from data-solutions provider BondCliQ Media Services show how many bonds each company has issued by maturity and how they have traded as the stocks have pulled back.
The first chart shows that Microsoft has by far the most bonds, mostly in the 30-year bucket. The software and cloud giant has more than $50 billion in long-term debt, according to its 2023 10-K filing with the Securities and Exchange Commission.
Outstanding Magnificent Seven debt by maturity bucket.
Source: BondCliQ Media Services
This chart shows trading volumes over the last 10 days, divided by trade type. The green shows customer buying, while the red is customer selling. The blue shows dealer-to-dealer flows. Microsoft, for example, has seen almost $1.3 billion in customer buying from dealers in the last 10 days and $960 million in customer sales to dealers.
Magnificent Seven debt trading volumes (last 10 days).
Source: BondCliQ Media Services
This chart shows that every name in the group has enjoyed better net buying in the last 10 days, with Microsoft leading the way.
Net customer flow of Magnificent Seven debt (last 10 days).
Source: BondCliQ Media Services
This chart shows spread performance over the last 50 days for an intermediate-term bond from each of the seven issuers. Most have tightened or remained steady over the period.
Historical spread performance of Magnificent Seven debt.
Source: BondCliQ Media Services
Read also: Red flags waving for tech stocks as AI bounce fades, China fears escalate
Apple’s stock entered correction Wednesday upon falling more than 10% from its July 31 peak of $196.45. The company sells mainly discretionary products, and right now “consumers are still being pinched” and thinking more carefully about where they spend their money, according to Matt Stucky, senior portfolio manager for equities at Northwestern Mutual Wealth Management.
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Digital advertising is Meta and Google’s world, and everyone else is coping with it
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There are two certainties in the tech world when it comes to digital advertising: Google and Meta. And then there’s everyone else.
Through economic thick and thin, Google and Meta are the gold standards by virtue of broad reach (billions of people globally), product dominance (in search and social media, respectively) and in their positions in the lightning-fast AI race. This week’s earnings results for Alphabet Inc.
GOOGL,
+2.46% GOOG,
+2.42%
and Meta Platforms Inc.
META,
+4.42%
proved that emphatically once again.Both companies rebounded from recent wobbly digital ads sales of their own through gigantic consumer reach and aggressive plans to parlay AI into ad sales. Google has developed (or dabbled) in some form of AI for at least seven years, and in a conference call with analysts Wednesday, Meta Chief Executive Mark Zuckerberg said his company will focus in the near term on AI to develop agents, ad features in existing products like Instagram and Reels, and internal productivity and efficiency. “We want to scale them, but they are hard to forecast,” he admitted.
Read more: Meta’s stock jumps after AI, ad momentum drive earnings and revenue higher
And: Alphabet earnings push stock up 6%, fueled by strong ad sales and strides in AI
Conversely, for companies consigned to the also-ran category, such as Snap Inc.
SNAP,
+3.39%
and X — the former Twitter — the news was bleak. Snap forecast disappointing third-quarter sales amid a spending push to draw advertisers.“We continue to believe it will take multiple quarters of improved execution for many investors to get more comfortable with the story longer term,” JP Morgan analysts said in a note on Snap earlier this month.
Digital-advertising leader Google sought to remind everyone it has been doing AI a long time while Microsoft Corp.
MSFT,
+2.31% ,
a major investor in ChatGPT pioneer OpenAI, tempered its approach, Josh Wetzel, chief revenue officer at OneSignal, said in an interview. “AI’s greatest immediate value may be for Facebook advertising,” he said, pointing to it as an efficient and effective tool after Facebook encountered issues with data-privacy changes Apple Inc.
AAPL,
+1.35%
made to mobile devices.Read more: Alphabet earnings remind Wall Street of Google’s AI prowess
“Meta’s solid quarter adds further evidence to the view that advertisers are choosing to spend their budget on the so-called market leaders, such as Facebook and Instagram, at the expense of the smaller social-media networks, like Snap,” said Jesse Cohen, senior analyst at Investing.com.
Jon Oberlander, executive vice president of social at digital-marketing agency Tinuiti, added: “It is, to some extent, still Meta/Google’s game, especially for performance advertisers, as the ROI and scale advertisers can find in the mid-lower funnel gap above other platforms.”
At the same time, Forrester analyst Kelsey Chickering said linear television ad revenue will slow between now and 2027 to about $65 billion from $70 billion as traditional TV continues to lose the under-25 crowd that has fled to streaming services and creator-heavy platforms like Snapchat and TikTok.
Digital advertising is on track to grow in the high single digits, or more, in 2023, slightly ahead of June’s forecast estimates from GroupM and Magna of around 8% each, according to Brian Wieser, head of Madison and Wall, a media and advertising consultancy for investors.
Most of that growth will benefit Google, Meta, and Microsoft’s LinkedIn, according to data from Emburse. Conversely, Emburse found ad spending on Twitter/X has plunged 54% from a year ago in May, before Elon Musk bought the company.
“Google, Meta and LinkedIn are platforms where people go to consume information, search for ideas, or give context to what they experiencing in their personal or work lives,” Emburse Chief Experience Officer Johann Wrede said.
While Alphabet CEO Sundar Pichai boasted Wednesday of “continued leadership in AI and our excellence in engineering and innovation are driving the next evolution of Search” and other services, as well as improved YouTube ad sales, Meta’s addition of potential X-killer Threads could dramatically inflate its ad sales going forward.
Zuckerberg sees potential in Threads long term despite a plunge in its user sign-ups because X is hemorrhaging advertising clients, and this week reportedly slashed ad costs to lure business customers.
“The launch of Threads holds great promise for Meta. While there are currently no ads on the app, it’s inevitable that they will come and the ability to use data from other Meta properties for targeting is a highly lucrative proposition for brands,” Aaron Goldman, chief marketing officer at Mediaocean, said in an email.
That translates to more near-term pain for smaller platforms such as Snap and X, which are posting negative growth, Michael Nathanson of SVB MoffettNathanson warned in a note Wednesday.
“The truth is that Alphabet started integrating machine learning and artificial intelligence into their products and ad solutions close to a decade ago,” he said. Snap and others are scrambling to catch up.
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Meta’s stock jumps after AI, ad momentum drive earnings, revenue jump
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Facebook parent Meta Platforms Inc. is raking in digital ads, as its earnings attest, and Wall Street is rewarding it. The company’s stock rose about 7% in after-hours trading Wednesday.
Meta
META,
+1.39%
reported fiscal second-quarter net income of $7.79 billion, or $2.98 a share, compared with net income of $6.7 billion, or $2.46 a share, in the year-ago quarter.Revenue climbed 11% to $32 billion from $28.8 billion in the year-ago quarter.
Analysts surveyed by FactSet had expected on average net income of $2.91 a share on revenue of $31.1billion.
Also see: Zuck beats Musk at his own game with Meta’s year of efficiency
A rebound in advertising, the monetization of Instagram and Reels, and AI-fueled ad targeting and measurement contributed to the quarter’s performance. Meta’s better-than-expected performance comes on the heels of a similarly strong quarter from Google parent
GOOGL,
+5.78% GOOG,
+5.59%
Alphabet Inc. and poor results from Snap Inc.
SNAP,
-14.23% .“We had a good quarter. We continue to see strong engagement across our apps and we have the most exciting roadmap I’ve seen in a while with Llama 2, Threads, Reels, new AI products in the pipeline, and the launch of Quest 3 this fall,” Meta Chief Executive Mark Zuckerberg said in a statement announcing the results. AI has been an increasingly dominant story line for Meta, which has quickly shifted its focus from the metaverse. Zuckerberg said AI remains the company’s near-term focus, with metaverse poised to have a long-term impact.
“In many ways, the two are interrelated,” Zuckerberg said of AI and metaverse in a conference call with analysts. He also spotlighted the potential of Threads, a Twitter-like service that launched earlier this month with much fanfare. “When it gets to hundreds of millions of users, we’ll see how it monetizes,” he said. “It is a long road ahead.”
Meta executives forecast third-quarter revenue of $32 billion to $34.5 billion, while analysts on average were expecting $31.2 billion, according to FactSet.
Facebook had 2.06 billion daily active users, up 5% from a year ago, and the “family” of Meta apps — which includes Instagram — reported daily active users of 3.07 billion, up 7%.
There were blips amid the hoopla, however. Meta says it expects 2023 total expenses will be in the range of $88 billion to $91 billion, compared to the prior range of $86 billion to $90 billion because of legal-related expenses in the second quarter. And Meta’s headcount dropped 14% from a year ago to 71,469 as of June 30. Zuckerberg said Meta’s austerity program will continue into 2024.
Meta’s stock improved 1.4% to $298.57 in the regular session. The stock has sky-rocketed 148% so far this year, while the broader S&P 500 index
SPX,
-0.02%
has increased 19%.[ad_2]
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Sales forecast sinks Snap stock, and execs say more investments are likely ahead to improve platform
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Like other social-media platforms, Snap has struggled with a slowdown in the digital ad market.
AFP/Getty Images
Shares of Snap Inc. slid in after-hours trade Tuesday after the social-media platform forecast third-quarter sales that were below expectations, amid concerns about a wobbly digital advertising backdrop and the company’s spending push to improve the way people interact and advertise when they log on.
Snap
SNAP,
-1.34%
said it expects third-quarter revenue of $1.07 billion to $1.13 billion. The midpoint of that range was below FactSet estimates for $1.13 billion.Shares tumbled 18.4% after hours on Tuesday.
“From a revenue perspective, our business remains in a period of rapid transition as we work to improve our advertising platform, while forward visibility of advertising demand remains limited,” executives said in Snap’s earnings release.
Like other social-media platforms, Snap has struggled with a slowdown in the digital ad market, amid advertiser wariness of a recession. Snap has also faced competition from the likes of Tiktok and Instagram and Facebook parent Meta Platforms Inc.
META,
+0.98% .Snap has invested heavily strengthening its advertising platform, to serve users with more relevant ads and bring more impact to the businesses trying to advertise. It has also been spending to boost user engagement. Management, during Snap’s earnings call on Tuesday, said it would likely make “a further step up in investment here in Q3” to accelerate the progress being made on those efforts.
Executives said during the earnings call that engagement with Snapchat friend stories in the U.S. had started to fall more slowly, with viewership trending better than they had forecast. And they said time spent watching Spotlight — a part of the site that helps users explore and discover content — more than tripled year over year.
JPMorgan analysts, in a note earlier this month, said they continued to monitor Snap’s “heightened infrastructure costs.” But they said that the digital ad market had “stabilized” in the second quarter and that advertisers weren’t feeling as cautious, despite worries over the state of the economy.
“That said, we continue to believe it will take multiple quarters of improved execution for many investors to get more comfortable with the story longer-term,” the analysts said.
For the second quarter, Snap reported a net loss of $377 million, or 24 cents a share, compared with $422 million, or 26 cents a share, in the same quarter last year. Revenue fell to $1.07 billion, compared with $1.11 billion in the prior-year quarter.
Analysts polled by FactSet expected Snap to report a per-share loss of 25 cents a share, on revenue of $1.05 billion.
Daily active users rose 14% year over year to 397 million.
Evan Spiegel, Snap’s chief executive, said during Tuesday’s call that despite the competition from larger social platforms, it still had some advantages — namely, communication with friends and family.
“We actually think providing this place for friends and family to communicate has only become more important as more and more platforms focus on public social-media-style features where people feel like they have to compete for popularity, compete for likes and comments,” Spiegel said.
“It’s never been more important to actually build deeper relationships with your friends and family,” he added.
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With Microsoft, Meta and Alphabet earnings hanging on AI, more investors are asking: ‘How are you going to pay for that?’
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Shares of big tech companies have coasted through this year on AI euphoria, but as Microsoft Corp., Alphabet Inc. and Meta Platforms Inc. prepare to report results this week, some investors are starting to ask how much those AI advancements might actually cost.
Those questions have surfaced after several months during simply saying “AI” on earnings calls appeared to be enough for investors. If the economy sours though — as some expect in the second half of this year or next year — big tech’s AI ambitions could go with it.
“Given the exorbitant costs associated with the development, hosting and serving of AI products, many investors are concerned about the potential for [fiscal 2024] commentary regarding a material increase,” Jefferies analyst Brent Thill wrote, according to a MarketWatch earnings preview for Microsoft’s
MSFT,
-0.89%
results.Microsoft and Alphabet Inc.
GOOGL,
+0.69% GOOG,
+0.65% ,
which both report on Tuesday, have been in heated competition in the world of online search and digital advertisements, as Microsoft leans more on its massive investments in research lab OpenAI to muscle up its own search capabilities. But a Deutsche Bank analyst said that so far, Google appears to have the upper hand in that battle.Still, for Microsoft, after a broader pullback in IT spending earlier this year, analysts have found more to like about its cloud-computing business — namely market-share gains, generally-sturdy demand, and whatever ways AI can fit into the equation. Wolfe Research analyst Alex Zukin, in a recent note, said he believed “the focus will turn from what is good enough, to how good can it be,” as Microsoft moves deeper into AI.
“How good can it be?” might also be a question for Meta
META,
-2.73% ,
which reports second-quarter results on Wednesday.Shares of the social-media company have more than doubled in value so far this year. JMP analyst Andrew Boone, in a recent note, cited likely improvements in Meta’s digital ad segment, better engagement, and a broader advertising backdrop that “appears to be stable” after a slowdown in spending, Still, there are signs that the initial user attraction to Threads, Meta’s answer to Twitter, has fizzled.
This week in earnings
For the week ahead, 166 companies in the S&P 500 index report results, including 12 from the Dow, according to FactSet. Among them are Domino’s Pizza Inc.
DPZ,
-0.62% ,
which now plans to deliver pizza via Uber Eats after years of chafing at third-party delivery apps. Industrials General Electric Co.
GE,
-0.82%
and 3M Co.
MMM,
+0.04%
also report, after 3M agreed to pay $10.3 billion to settle accusations it was responsible for so-called “forever chemicals” in drinking water.Quick-service restaurant chains Chipotle Mexican Grill Inc.
CMG,
+0.20%
and McDonald’s Corp.
MCD,
-0.51%
also report, with BofA analysts expecting an “almost normal” quarter for the industry, after spending at chain restaurants grew last month and costs for some ingredients started to ease following two years of supply disruptions. Auto makers General Motors Co.
GM,
-1.81%
and Ford Motor Co.
F,
-0.71%
also report, and while parts shortages that have constrained vehicle production have shown signs of fading, so has electric-vehicle “euphoria.”The calls to put on your calendar
Visa, Mastercard: Earlier this month executives from the big banks said U.S. consumers are generally doing OK despite still-rampant inflation, although perhaps less OK than in prior months. This week credit-card giants Visa Inc. and Mastercard Inc. report results on Tuesday and Thursday, respectively. The profit, sales and credit-card volume figures from Visa
V,
-0.15%
and Mastercard
MA,
-0.14%
will offer more specifics on consumer spending, as vacations and concerts compete with more expensive and more pressing needs, like groceries and other bills.Shares of Visa and Mastercard are up so far this year, but some analysts said there could be more room investors to step in. SVB MoffettNathanson analyst Lisa Ellis recently said shares of both companies were hovering at “unusually attractive” levels.
The number to watch
Mattel outlook, and anything ‘Barbie’-related: The “Barbie” movie hit theaters nationwide on Friday. And after an epic marketing campaign, Mattel Inc.’s investors, banking on the film to drive a rebound for the toy maker during the second half of this year, will be zeroed in on the box-office results following the film’s debut on Friday.
Expectations for the film are huge. And when Mattel
MAT,
-0.42%
reports second-quarter results on Wednesday, executives could offer the first answers to some big questions: Has the film helped revive toy sales? Sales for anything else? Will the “Barbenheimer” effect help or hurt financials?The film — directed by Greta Gerwig, written Gerwig and Noah Baumbach, and starring Margot Robbie and Ryan Gosling — brings together two writers with indie bona fides and two actors with mainstream starpower. Reviews so far have been favorable, and Barbie is already Mattel’s most profitable franchise. But the movie isn’t directly geared toward children, movie theaters have struggled to get back on track after pandemic lockdowns, and toy demand through this year has been weak after ballooning during the pandemic. And some analysts don’t expect “Barbie” to do much for Mattel’s stock.
Emily Bary and Jon Swartz contributed reporting to this story.
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Here’s why Wall Street has fallen out of love with Tesla — for now
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Late on Wednesday, Tesla Inc.
TSLA,
-1.10%
reported that quarterly sales were up 47% from a year earlier. But the stock tumbled 10% on Thursday.Tesla’s shares are still up 113% this year. The company is among a group of 13 in the S&P 500 that stand out with high growth expectations for sales, earnings and free cash flow through 2025.
But less than half of analysts polled by FactSet rate Tesla a buy. Emily Bary explains what they are worried about.
Traders have placed large short bets against Tesla and two of its rival EV makers — Rivian Automotive Inc.
RIVN,
-2.09%
and Nio Inc.
NIO,
+2.52% .
Claudia Assis looks into how well those trades have been working out.Cody Willard explains why he remains confident that Tesla and Rivian will dominate the EV market over the long term.
Related coverage:
Here’s what may propel U.S. stocks for years.
Chipotle Mexican Grill is among 14 stocks named by Michael Brush for consideration by investors looking to ride along with long-term improvement of U.S. labor productivity.
AP
The S&P 500
SPX,
+0.03%
has returned 19% this year, following its 18% decline in 2022. On the same basis, with dividends reinvested, the benchmark index is still down 2% since the end of 2021.What is going on? Michael Brush believes that a high level of corporate investment in new technology and equipment is setting the stage for a long phase of earnings growth for U.S. companies. He shares four developments behind the coming productivity boom and 14 stocks expected to benefit from it.
A signal for the stock-market’s health
Getty Images
The Dow Jones Industrial Average
DJIA,
+0.01%
is up 6% this year. The venerable index has trailed the S&P 500, but its closing level of 35,255.18 on Thursday was only 4% shy of its record close a 36,799.65 on Jan. 4, 2022. Joseph Adinolfi explains Dow Theory, which according to technical analysts is sending a strong bullish signal for the stock market.Other opinions about market sentiment:
- Investors are the most bullish on stocks since before the 2022 bear market, says Vanguard
- Be greedy in your 401(k): The ‘big money’ is still fearful
Even if you have resisted the idea of a Roth IRA, you may soon be forced to have one
This year if you are age 50 or older and are already maxing-out your contribution to a 401(K), 403(B) or other qualified employer-sponsored tax-deferred retirement plan at $22,500, you can make an additional “catch up” tax deductible contribution of $7,500 for a total of $30,000. But starting in 2024, the catch up contribution will no longer be tax deductible if you earn at least $145,000 a year. You can still make the contribution with after-tax money into a Roth 401(K) account that your plan administrator may already have set up for you.
Alessandra Malito provides more details and news about employers’ efforts to delay the rule’s implementation.
Beth Pinker writes the Fix My Portfolio column. This week she digs into Roth IRA conversions, through which you can simplify your taxes down the line.
A hot vote in Spain
The center of Madrid on July 15, 2023. A brutal heat wave could affect turnout for the country’s general election on July 23.
Uncredited
Barbara Kollmeyer reports from Spain about a highly contested election on Sunday, with controversy over the government’s policies during the pandemic, parties’ social policies and the possibility of a coalition government that might rattle financial markets.
Meta vs. Alphabet
Shares of Meta Platforms Inc. and Alphabet Inc. trade only slightly higher than the S&P 500 on a forward price-to-earnings bases, while Nvidia Corp., Microsoft Corp. and Apple Inc. trade much higher.
FactSet
Leslie Albrecht looks at Meta Platforms Inc.
META,
-2.73% ,
which is Facebook’s holding company and has a hit on its hands with the new Threads social-media platform, and Google holding company Alphabet Inc.
GOOGL,
+0.69% ,
to consider which stock is a better buy.Brett Arends: ‘I used to work at Nvidia. The stock I got is now half my portfolio. Should I sell?’
The Ratings Game
In The Ratings Game column, MarketWatch reporters track analysts’ thoughts about various stocks. Here’s a sampling of this week’s coverage:
You don’t know every bad factor causing air travel to be nothing but harassment
Getting there is half the fun.
Getty Images
The U.S. flying scene — from shortages of equipment and labor (and runways) to ill-staffed air-traffic control towers — is a well-known nightmare for U.S. travelers. But there is more to the story. Jeremy Binckes looks into other factors that may surprise you and cause great inconvenience this summer.
The Federal Reserve is expected to raise interest rates again next week
The Federal Open Market Committee will meet next Tuesday and Wednesday, to be immediately followed by a policy announcement. Economists expect the central to raise the federal-funds rate by another quarter point. The question is whether or not this will end the Fed’s inflation-fighting rate cycle.
More coverage of the Fed:
- Bernanke says it is clear Fed will hike interest rates next week, but a September move is ‘up for grabs’
- FedNow launches today. What to know about the Fed’s real-time payment service.
How much would you pay for 100% downside protection in the stock market?
MarketWatch illustration/iStockphoto
Over the past 30 years, the SPDR S&P 500 ETF Trust
SPY,
has returned 1,650%, for an average annual return of 10%, with dividends reinvested, according to FactSet. But it hasn’t been a smooth ride. The ETF, which tracks the benchmark S&P 500, fell 18% last year and 37% during 2008, for example. And there have been even larger declines if the analysis isn’t confined to calendar years.But can you ride through market declines? Many studies have shown that most investors who try to time the market sell after a decline has started and buy back in well after a recovery is under way, which means their long-term performance can suffer significantly.
In this week’s ETF Wrap column (and emailed newsletter), Isabel Wang describes a new buffered fund that can give you 100% downside protection over a two-year period, in return for a cap on your potential gains in the stock market. Here’s the price you would pay for the protection.
The World Cup games have started
Hannah Wilkinson scored the home team’s first goal against Norway during the first World Cup game in Auckland, New Zealand, on July 20.
Getty Images
The Women’s World Cup began Thursday with an upset victory by New Zealand over Norway.
James Rogers reports on what is expected to be a much easier environment for FIFA and corporate sponsors than that of last year’s Men’s World Cup in Qatar.
U.S. Soccer Federation President Cindy Parlow Cone participated in MarketWatch’s Best New Ideas in Money podcast and spoke about the long-term effort to achieve equal treatment for women soccer players.
More coverage of the World Cup:
Want more from MarketWatch? Sign up for this and other newsletters to get the latest news and advice on personal finance and investing.
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Cathie Wood’s ARK funds dump $26 million more in Coinbase stock, shed $13 million more of Tesla shares
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Funds associated with Cathie Wood’s ARK Investment continued to cull shares of Coinbase Global Inc. and Tesla Inc. on Monday, according to recent trade disclosures.
The ARK Fintech Innovation ETF
ARKF,
+1.58%
dumped 76,788 Coinbase shares
COIN,
+0.23%
on the day, while the ARK Innovation ETF
ARKK,
+2.29%
sold 127,266 and the ARK Next Generation Internet ETF
ARKW,
+2.23%
sold 44,784 shares.Those were worth $26.3 million based on Coinbase’s Monday closing price of $105.55, and the sales follow ARK’s move to dump about $50 million in Coinbase’s stock Friday.
Coinbase represents 0.78% of the Fintech Innovation ETF, along with 0.15% of the Innovation ETF and 0.30% of the Next Generation Internet ETF. ARK disclosed the transactions and weightings in the daily trade notifications it posts to its website.
Read: Coinbase’s spectacular stock surge after Ripple ruling sparks fierce debate
Meanwhile, the ARK Innovation ETF shed 38,329 Tesla shares
TSLA,
+3.20%
on Monday, while the ARK Next Generation Internet ETF sold 6,855. Those shares were worth $13.1 million based on Tesla’s Monday closing level of $290.38. Tesla represents about 0.12% of both funds as they continue to unload shares.Don’t miss: Tesla is looking at its best sales quarter ever
ARK scooped up 455 shares of Meta Platforms Inc.
META,
+0.57%
within its Next Generation Internet ETF and bought up 3,729 shares within the ARK Innovation ETF. That amounted to $1.3 million worth of stock based on Meta’s $310.62 Monday close.Two ARK funds bought a combined $790 million in Robinhood Markets Inc.’s stock
HOOD,
+0.89% ,
with the fintech fund scooping up 25,641 shares and the Next Generation Internet ETF buying 37,630 shares. ARK added 4,608 shares of SoFi Technologies Inc.
SOFI,
+4.41%
to the fintech fund, worth $43,683 based on Monday’s close.See also: SoFi’s stock catches another downgrade as analyst says it ‘needs to be valued more like a bank’
ARK was also active in shares of Twilio Inc.
TWLO,
-0.63% ,
buying 15,702 within the Fintech Innovation ETF, 133,499 within the Innovation ETF and 22,748 within the Next Generation Internet ETF. That amounted to $11.4 million in Twilio’s stock based on Monday’s $66.47 closing price.[ad_2]
