Three Things (July 28th)

Commentary2 months ago
“When the going gets weird, the weird turn pro.” - Hunter S. Thompson
1) Apple slays Q3 earnings expectations, with sales up 36% YOY, underscoring the strength of its entire ecosystem
Apple, a holding in Titan’s Flagship portfolio, announced exceptional earnings figures yesterday, with every single product line growing over 12% YOY and iPhone sales up nearly 50% YOY. During the same call, Apple executives sounded a note of caution, confirming that chip supply constraints will likely impact iPhone and iPad production and sales this quarter. Inverting the supply chain issues which will permeate throughout consumer electronics, we view this as favorable for Apple as continued robust demand should result in a large backlog for its products next quarter. Apple’s ecosystem control and customer loyalty gives us high confidence in the company’s revenue durability as it shifts its business mix towards more asset-light services.
2) Boeing stuns analysts with first positive per-share earnings since Q3 2019, suggesting a potential turnaround following its recent financial crisis
Earnings season is not without its surprises, with Boeing reporting a very much unexpected profit for Q2 2021, sending shares up nearly 5% as of this morning. The strong performance -- a profit of 40 cents per share from $17B in sales -- came in spite of the COVID-19 pandemic, the grounding and recertification of the 737 MAX, and 787 quality concerns and delivery holds. Despite the strong announcement, indicative of a normalizing economy, Boeing faces a long and challenging road ahead. Of particular concern are manufacturing issues with its 787 Dreamliner, uncertainty around production, and its main competitor (Airbus) continuing to perform well.
3) Virtual medicine darling Teladoc Health posts wider-than-anticipated Q2 net loss, suggesting significant slowdown
Teladoc Health shares fell starkly this morning after the company’s earnings call reported a net loss of $133.8M, well above consensus estimates, suggesting that the rapid rise of telemedicine is reaching a predictable slow-down as the pandemic recovery continues. Still, Teladoc visits were up 28% YOY from June 2020, and the company continues to hold a significant portion of market share. There was a fair amount of noise in the earnings report, as results included its two acquisitions over the past year (InTouch Health and Livongo Health). The company’s mission to create a unified healthcare experience has yet to prove to investors that it can do so profitably, as per share loss guidance exceeded Street expectations. We are not currently considering Teladoc as a holding due to the lack of a true competitive advantage and inability to demonstrate strong unit economics.

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