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Market 2018-02-02 and ER Analysis of FB, GOOG, AMZN & AAPL

战胜市场 10月前 132

It is a bloody Friday. The economy added 200,000 jobs in January as the unemployment rate stayed at 4.1 percent. Treasury yields jump again, 10-yr note @ 2.84%. The high interest fear causes the panic sell in market today.

As I said last weekend, market was facing selling pressure this week. For the week, Nasdaq -3.9%, S&P 500 -3.5%, Dow Jones -4.2%.

Crude -1.09% to $65.08. Gold -1.09% to $1,333.20. Dollar recovers (UUP +0.6%).

Another focus this week is the earnings from Big Four: Amazon, Apple, Facebook, Google

1. Cloud Service

Amazon is known as online retailer. However, the majority operating income (60%) comes from its AWS (Amazon Web Service Cloud), which presents 10% revenue in 2017. AWS is growing at 45% YoY, which is much slower than Microsoft (98%) and Google (claimed to be the fastest). Therefore, Microsoft and Google are eroding the market share from Amazon. Behind this three are IBM and Oracle. IBM cloud is growing at 24% rate.

2. Advertising

The #1 player is of course Google. #2 is Facebook. #3 is Amazon, which may surprise you. As more users move to mobile, google is facing challenges. Google needs to pay Apple for the ads on iOS, which causes the spike in ad costs and the selloff after ER. Facebook is fine, which makes the stock gain after ER. Amazon's Ads business is growing rapidly although it is still a small player. As google knows you searching/viewing habits, Facebook knows your social network and daily life, Amazon knows your shopping preference, which makes Amazon have huge potential in Advertising. 

3. Hardware

Apple relies heavily on iPhone. For 18Q1, handset count is actually flat although average price is $100 higher than 17Q1. Chinese market is key for growth. Google bets on Pixel phones and Google Home, and Amazon focuses on Echo. Microsoft's windows phone is shrinking. Facebook has a lot to catch up.

4. Media

Google (Youtube), Amazon and Apple are all trying to develop their Media department. One highlight of Apple's ER is paid subscriptions among services passed 240M (+30M Q/Q). As Apple says the company plans to reduce its net cash balance ($163B by end of 18Q1) to “approximately zero”, I am expecting dividend hike and acquisitions of Media companies.

In summary


  • GOOG: despite the higher cost, it is still a cash cow. Cloud service is growing rapidly. The company is leading self-driving cars, which provides hugh potential.
  • Apple: you should not bet against a company who is willing to spend $163B. Its Chinese business is growing well.
  • Facebook: no complaints of nearly 50% growth rate.
  • Amazon: its cloud service is losing market share although it is still growing 40+% Y/Y. Its advertising has huge potential.
  • All big 4 are growing rapidly. Catch the buying opportunities in near-term.

Winners

AMZN +2.9% after ER beats.

DUST(3x gold miner bear ETF) +10.1% as NUGT -10.8%.

S +5.1% after ER on improved profitability and cash flow, and raising full-year guidance.

EW +3.8% after ER beats:  Q4 EPS of $0.94 beats by $0.03. Revenue of $888.5M (+15.7% Y/Y) beats by $21.41M.

DATA +9% on Q4 beats, upside FY18 revenue guidance. It is difficult to valuate DATA for me.

MAT +8% in sudden swing of sentiment. It was -7% in pre-market after an ugly earnings report.

CHTR +4.4% as it adds customers, beats in Q4.

Losers

GOOG -4.8%. See my comments above.

AAPL -4.3%. See my comments above.

Chevron (CVX -5.6%) Exxon Mobil (XOM -5.1%) shares plunge following their Q4 ERs, as cost cuts and rising oil prices failed to offset weakness in international refining operations. As comparison, COP (-2.7%) is pure upstream player, which is positioned better for the rising crude price era.

V -3.8% as investors concern rising operating expenses. AXP -3.3%, MA -1.4%, SQ -1.9%, PYPL -2.3%...

CLX -6.7% after reporting Q2 EPS of $1.23 in-line. Revenue of $1.42B (+0.7% Y/Y) misses by $10M; despite nice guidance --- full-year sales growth of 1-3% and EPS of $6.17-6.37 vs. $5.66 consensus. PG -1.9%.

My Trades Today


  • Initiated position in AAPL @ $161.6.
  • Initiated position in V @ $120.8.
  • Bought back BGS @ $31.6 (sold a few days ago @ $33.6).
  • Added more PG, LIT, BOTZ, AMAT.




source: defeat market
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