Two tech giants generate differing reactions.
From The Wall Street Journal:
Facebook Inc. suffered the biggest-ever one-day loss in market value for a U.S.-listed company, marking a Wall Street U-turn on a company that has been a pillar of a yearslong tech-stock surge.
Facebook shares fell 19% to $176.26, erasing about $119.1 billion in market value, after the Menlo Park, Calif., company warned late Wednesday about slowing growth. Facebook’s loss in market value Thursday is larger than 457 of the 500 companies in the S&P 500 and bigger than the aggregate valuation of the bottom 20 companies in the S&P 500.
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The stock drop represented Facebook’s biggest percentage drop ever, and the shares were the worst performer in the Nasdaq 100 and second-worst in the S&P 500.
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On Wednesday, Facebook reported slower-than-expected revenue growth for the second quarter—albeit logging in at more than 40%—and said it expected quarterly revenue growth to decline over the rest of the year. Until then, Facebook had shown few business effects from the negative headlines that have dogged it in recent months.
Link to the rest at The Wall Street Journal
Amazon
From The Wall Street Journal:
Amazon.com Inc.’s profit topped $2 billion for the first time, powered by the company’s newer services businesses that are ushering the online retail giant into an era of swelling profitability.
Fast-growing areas including the company’s cloud-computing business, advertising offerings and services it provides to sellers on its site helped propel Amazon to its highest profit margin in years as executives said heavy investments are paying off. Those businesses have helped offset its traditional retail business, which tends to yield lower margins although still the bulk of its revenue.
The Seattle-based company on Thursday reported a second-quarter profit of $2.53 billion, up from $197 million a year earlier. That makes three straight quarters of profits over $1 billion, and extends Amazon’s profitability streak across three years. No longer is Amazon known for suffering losses or producing razor-thin income by plowing every dollar it makes back into investments. Still, other tech giants like Alphabet Inc. and Microsoft Corp. deliver much bigger profits.
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[Amazon’s] quarterly revenue of $52.89 billion did underwhelm Wall Street, coming in a bit below estimates even if up 39%. And its forecast third-quarter revenue of between $54 billion and $57.5 billion is also below analysts’ consensus estimates.
But the star for the period was Amazon’s profitability. Its operating margin was 5.6%, a big jump from last year’s second quarter and the highest rate in more than a decade.
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Amazon dominates e-commerce, and is now estimated to draw roughly half of every dollar spent online in the U.S. But its retail operation’s online-store growth is slowing—revenue rose 12% to $27.17 billion, a smaller lift than in the past several quarters.
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While Amazon sells many of the products consumers find on its website, millions of small businesses, retailers and manufacturers provide the rest. About 53% of products sold in the quarter were from independent merchants on the site, helping drive profitability.
The company collects roughly 15% on those sales. It also offers the chance for products to become eligible for Prime shipping via its network of warehouses for additional fees. That is typically cheaper than Amazon having to hold its own inventory.
Link to the rest at The Wall Street Journal
“Your Mom’s on Facebook” pretty much says it all.
Hmm, one got caught selling their products – I mean users – to anyone with money, and the products – I mean users – are upset and drying up. And The Wall Street Journal is surprised.
The other kept annoying day-traders by rolling their profits back into their business, to the point they can no longer spend faster than the money rolls in. And The Wall Street Journal is surprised.