Facebook’s obituary was premature.
And it all seemed so predictable…
You’ve heard all the arguments and cliches.
National Economic Council Director Brian Deese and Office of Management Budget Director Shalanda Young said a fight over the debt ceiling “is not a negotiation; it is an obligation of this country and its leaders to avoid economic chaos.”
- Nobody uses Facebook anymore.
- It’s a become a social media platform for older people and is losing the next generation.
- Mark Zuckerberg’s bet on the “Metaverse” has been an embarrassing fiasco.
- Metaverse graphics look clumsy and primitive.
- The government has Facebook in its sights after a whistleblower led to months of hostile news coverage and government hearings.
- Customers are backing away from virtual reality because of a possible recession.
Yet Meta Platforms (META) was up big yesterday after-hours – more than 18%.
It did this despite revenue declining for the third straight quarter.
What happened? It’s all about the trends.
First, META defied predictions that it was dying by showing better than expected revenue, average revenue per user, and daily active users.
Second, META is using $40 billion to increase its stock buyback plan – a fairly direct subsidy to shareholders.
Finally, and most importantly, META provided positive guidance, with Mark Zuckerberg saying that the company is cutting expenses, focusing on efficiency, and presiding over a family of apps that is generating strong revenue.
“Our community continues to grow and I’m pleased with the strong engagement across our apps,” he said. “Our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization.”
As we discussed earlier, corporate leadership matters. Personnel is policy, and Zuckerberg is defying predictions about Meta’s managed decline.
Remember, decline is a choice. Never give in to it.
Keep Moving,
442% in less than a month…
and 1,154% in 16 months…
and urging subscribers to hold back from any new crypto investments right
before the crypto bear market.
COACH’S CORNER
“Yesterday was a day of two halves. The morning up until the FOMC was quite literally as boring as hell. It was flat, but with hints of bullish undertones. Not a day to make any serious directional bets so we stayed patient and closed out some credit spreads. However, Jerome Powell’s press conference really got the market moving after 2:30.
The market ended with a major rally that looks set to continue into tomorrow. The underlying momentum structure of the market, and movement from META after the bell looks to send us upward. Don’t think just because the run-up was parabolic it can’t continue tomorrow. Shorting a market like this can be suicide for your account. Rather, let’s see how the morning plays out – we could easily see a big gap down. Make your plan for an up day and a down day so you aren’t wondering what to do.”
Cheers,
Chris Hood
WORD ON THE STREET
Fed Does The Expected, Comcast Bails On Buzzfeed, ChatGPT Plus
- Capital Is A Coward – Markets hate surprises, but love the predictable. The Federal Reserve soothed the market by doing what everyone was expecting – a quarter point raise in interest rates. “Inflation data received over the past three months show a welcome reduction in the monthly pace of increases,” said Federal Reserve Chairman Jerome Powell. “And while recent developments are encouraging, we will need substantially more evidence to be confident that inflation is on a sustained downward path.”
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The Next Stage Of AI – After massive interest in OpenAI’s ChatGPT, it’s time for the inevitable next step – monetization. ChatGPT Plus will soon be available for $20 a month. Perks include increased access, faster responses, and some undisclosed new features.
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The Buzzfeed Rally Comes To An Abrupt End – Comcast is taking advantage of Buzzfeed’s (BZFD) stock market surge. Comcast sold 5,726,385 shares, dumping them between January 30 and February 1. Not surprisingly, BZFD lost more than 5% during the trading day yesterday. The stock had been recovering from its ruinous year by saying that it would integrate AI into its core business.
- Shell Reports Record Profit – Shell (SHEL) followed up Exxon Mobil’s positive results with its own record profit. The energy giant made $40 billion in 2022. Fourth-quarter earnings blew away analyst expectations.
HOT SPOTS: What’s Going on in Geopolitics
- Lukashenko Visits Zimbabwe – Belarussian President Alexander Lukashenko received a joyful welcome in Zimbabwe, as the Russian ally leaned into Moscow’s strategy of presenting the Russian bloc as the champion of the Third World. “It is just that the West remains determined to punish our two countries, but they will not succeed because the development strategies of the two countries is to ensure that we are self sufficient,” said Godwills Masimirembwa of the ruling Zanu PF party. Belarus is seeking new markets for its heavy machinery and weaponry, as it suffering from Western sanctions that have been imposed on Russia and its allies.
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UK Hit By Biggest Strike In A Decade – Teachers, railway workers, and others are on strike in the United Kingdom, with an estimated 500,000 taking part in “Walkout Wednesday,” the biggest single labor action in about 12 years. Double-digit inflation is putting major pressure on the Conservative government. Labor militancy is increasing as well. Official data show the number of working days lost between June and November because of strikes was the highest six month total in three decades.
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Ukraine Warns Of Russian Anniversary Offensive – Ukrainian defense minister Oleksii Reznikov said that Russia has mobilized half-a-million troops for an offensive that could come on the anniversary of the initial invasion, February 24. He also suggested Russia might launch even earlier, on Russia’s “Defender of the Fatherland” holiday on the 23rd. He argued that Russia has mobilized far more soldiers than President Vladimir Putin has admitted. “Officially they announced 300,000 but when we see the troops at the borders, according to our assessments it is much more,” Reznikov said.
CUTTING EDGE: What‘s Happening In Tech
- Rivian Workers Latest Casualties In EV Price War – Rivian Automotive (RIVN) is letting go 6% of its workforce as the company struggles to keep up with a price war launched by Tesla. With Ford following up by slashing prices, RIVN is struggling to remain competitive. RIVN has lost about 90% of its value since the IPO in 2021.
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Expectations For A Loss At Amazon – After six record annual profits in a row, hard times may have finally come for AMZN. Analysts are expecting the first annual loss since 2014 – to the tune of about $1 billion. The last time that happened, Amazon had less than $3 billion in annual revenue.
- Facebook Scores Legal Victory Over FTC – On top of Meta’s after-hours surge yesterday, the company also got some good news in the courts. The Wall Street Journal reports U.S. District Judge Edward Davila denied an attempt by the Federal Trade Commission to stop Meta’s acquisition of VR-startup Within Unlimited. It’s a major gain for Mark Zuckerberg and his bet that the future of his company will be found in VR.
FOR YOUR CONSIDERATION
“The market may dip and dodge and dive. The volume will spike and price might bounce around. But as soon as it’s over, we’re returning to whatever trend is in place.”
Follow your plan. No matter what Federal Reserve Chairman Jerome Powell does or does not do, or does or does not say, it shouldn’t change your overall approach.
Chris Hood shows how to keep your head while the rest of the market is losing theirs.
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