Coffee With Greta: Social Media Stocks Slide After SNAP’s Q3 Miss
DJIA Futures: -200 (-0.7%)
SPX Futures: -27 (-0.7%)
NASDAQ Futures: -133 (-1.3%)
Good morning friends!
Futures are slipping as traders digest the latest batch of earnings.
Let’s get right to it!
Snap Plunges on Revenue Miss
Snap Inc (SNAP) shares are plunging 28% ahead of the open after missing Q3 revenue expectations.
Here’s how the social media giant’s results compared to analysts’ expectations:
- EPS: $0.08 vs a small loss expected
- Revenue: $1.13 billion vs $1.14 billion expected
- Global Daily Active Users: 363 million vs 358.2 million expected
Revenue was up just 6% year over year, the first single-digit growth since Snap went public in 2017.
Even as daily active users rose 19% compared to a year ago, average revenue per user dropped 11%.
In its letter to investors, the company said it is struggling with reduced spending from advertisers.
The letter said, “We are finding that our advertising partners across many industries are decreasing their marketing budgets, especially in the face of operating environment headwinds, inflation-driven cost pressures, and rising costs of capital.
The company declined to give Q4 guidance.
Snap’s revenue miss is dragging down other stocks in premarket trade with Pinterest (PINS) tumbling 8.2%, Meta (META) down 4%, and Alphabet (GOOGL) falling 2%.
American Express Slips Despite Earnings Beat
American Express (AXP) shares are falling 4.8% in premarket trade despite beating Q3 expectations on the top and bottom line.
Here’s how the credit card company’s results compared to analysts’ expectations:
- EPS $2.47 vs $2.40 expected
- Revenue: $13.56 billion vs $13.52 billion expected
Card-member spending jumped 21% in the quarter, with travel spending surging 57%.
American Express built up its loan loss reserves by $387 million in anticipation of a weakening economy.
The company hiked its full-year EPS forecast to $9.25 to $9.65.
Treasury Yields Extend Rally
Treasury yields are up again today with the 10-year hitting a fresh 14-year high.
The 10-year yield is up 6 basis points to 4.3% while the 2-year yield is up just about 1 basis point to 4.61%.
The recent rally in yields comes amid ramped-up concerns about a recession.
Philadelphia Fed President Patrick Harker said in a speech Thursday, “We are going to keep raising rates for a while. Given our frankly disappointing lack of progress on curtailing inflation, I expect we will be well above 4% by the end of the year.”
Fed Governor Lisa Cooke echoed those comments, saying inflation is “too high” and the Fed will continue rate hikes “until the job is done.”
Oil Prices Steady
Oil prices are flat today as concerns about higher interest rates offset hopes of higher Chinese demand and production cuts.
West Texas Intermediate crude futures are down 0.1% to $84 bbl while Brent crude futures are slipping 0.1% to $92 bbl.
Several Fed officials made hawkish comments this week, tamping down optimism about increased demand in China as the country loosens Covid restrictions.
Key Earnings Next Week
Several mega-cap names are set to report Q3 results next week, here’s a look at the key reports on the calendar:
- Tuesday AM: Coca-Cola (KO), General Electric (GE), UPS (UPS), General Motors (GM), 3M (MMM)
- Tuesday PM: Microsoft (MSFT), Alphabet (GOOGL), Twitter (TWTR)
- Wednesday AM: Boeing (BA)
- Wednesday PM: Meta (META), Ford (F)
- Thursday AM: Caterpillar (CAT), Shopify (SHOP), Southwest Airlines (LUV)
- Thursday PM: Apple (AAPL), Amazon (AMZN), Pinterest (PINS)
- Friday AM: Exxon Mobil (XOM), Chevron (CVX)