26 October, 2023

Meta Reports Best Quarter In Years As Tech Stocks Continue To Slide – She’s Got The Stocks 26 October 2023

Tech stocks continued to fall this week as a handful of key results failed to detract from rising treasury bond yields.

The tech-heavy Nasdaq composite — which has started to feel the impact of the outbreak of war in the Middle East last week — fell further. In the last five days, it has dropped an additional four per cent.

Meanwhile, the 10-year treasury yield spiked at 4.93 per cent at yesterday’s close (US time) as new data showed an increase in people buying new homes despite eight per cent mortgage rates in the country.

Google’s stock has plummeted by 10 per cent, marking its most significant single-day drop since March 2020. A staggering US$200 billion (AU$318.5 billion) in market value has vanished in just 24 hours.

Furthermore, the seven leading technology stocks in the S&P 500 have collectively shed more than US$500 billion (around AU$795 billion) in value today, underscoring the severity of this widespread tech selloff. Consequently, the S&P 500 has reached its lowest point in five months.

This episode underscores the vulnerability of a market where a handful of stocks play a pivotal role. It raises the question: Are tech stocks starting to factor in the possibility of an impending recession?

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Thanks to its cloud growth and AI ambitions, investors were optimistic about Microsoft following its earnings. Its share price grew by 3.2 per cent this week.

Meanwhile, they were less optimistic about Alphabet’s sliding cloud revenue growth, which saw its share price drop by nearly 9 per cent.

It was also bad news for Amazon which saw its shares fall 5.26 per cent this week

Fortuitously for Mark Zuckerberg, Meta reported its best quarter in years. The tech giant reported third-quarter revenue of US$34.15 billion (AU$54.34 billion), beating expectations and rising 23 per cent year-on-year. His enemies are safe from another seeing-to in his backyard UFC-style Octagon.

This was in response to an increase in advertising demand. However, the company warned that the ongoing conflict in the Middle East and changing macroeconomic conditions could hurt its earnings in Q4. Its ongoing cost-cutting measures and development of AI and virtual reality tools would also see the firm continue to spend vast sums of money.

One significant factor in Meta’s resurgence appears to be its advanced adaptation to Apple’s iOS privacy changes in 2021, which disrupted user targeting for app developers. Meta’s substantial investments in artificial intelligence have enabled it to attract retailers seeking targeted promotional opportunities.

Meta’s finance chief, Susan Li, highlighted online commerce as the primary contributor to year-over-year ad revenue growth, followed by consumer packaged goods and gaming.

CEO Mark Zuckerberg noted a seven per cent increase in time spent on Facebook and a six per cent boost on Instagram in the current year due to recommendation enhancements. Meta’s success outpaces competitors with Google’s parent company, Alphabet, reporting approximately 9.5 per cent growth in ad revenue, and Snap revealing a five per cent revenue increase.

It was a strong week for Netflix too, with the streaming giant reporting better-than-expected Q3 earnings as well as an increase in subscribers and a confirmation of its intention to lift streaming costs.

The tech market’s ex-golden child Nvidia continued to see its share price slide as the US government announced a decision to stop allowing chips to be exported to China. It was also a less than positive week for Elon Musk’s Tesla with the vehicle company seeing shares plunge in reaction to the news it is cutting costs on its EVs.

	Open	Close	Change
Macquarie Telecom Limited (ASX: MAQ)	$63.46	$62.22	-1.95%
REA Group (ASX: REA)	$158.97	$153.20	-3.63%
Atlassian (NAS: TEAM) (USD)	$194.01	$178.59	-7.95%
Xero (ASX: XRO)	$113.92	$108.45	-4.80%
Carsales.com (ASX: CAR)	$29.29	$28.23	-3.62%
NEXTDC (ASX: NXT)	$12.50	$12.16	-2.72%
WiseTech Global (ASX: WTC)	$62.65	$59.95	-4.31%
Appen (ASX: APX)	$1.00	$0.98	-2.00%
Airtasker (ASX: ART)	$0.17	$0.20	17.65%
Telstra (ASX: TLS)	$3.87	$3.87	0.00%
Adobe (NAS: ADBE) (USD)	$557.87	$521.14	-6.58%
Salesforce (NYSE: CRM) (USD)	$204.83	$197.06	-3.79%
Apple (NAS: AAPL) (USD)	$175.84	$171.10	-2.70%
Alphabet (NAS: GOOGL) (USD)	$137.96	$125.61	-8.95%
Meta (NAS: META) (USD)	$316.97	$299.53	-5.50%
Microsoft (NAS: MSFT) (USD)	$330.11	$340.67	3.20%
Amazon (NAS: AMZN) (USD)	$128.13	$121.39	-5.26%
Nvidia (NAS: NVDA) (USD)	$421.96	$417.79	-0.99%
Netflix (NAS: NFLX) (USD)	$346.19	$411.25	18.79%

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