Thursday, Apr 28th 2022

Three Things (4/28)

Commentary

“A man's alter ego is nothing more than his favorite image of himself.” ― Frank Abagnale

The below content and projections are the opinion of the authors. Any conclusions or takeaways are their own. This should not be considered as investment advice. Investing involves the risk of loss and returns are not guaranteed.

1) Meta Platforms shares surge after quarterly report is better-than-feared as earnings volatility continues

  • The company’s first quarter earnings per share beat expectations while revenue and its forecast for the current quarter were just shy of estimates.
  • Daily and monthly active users at Facebook grew in the first quarter after a surprising decline in Q4.
  • Meta also lowered the expected range for full-year expenses by $3 billion.

Titan’s Takeaway: Shares of Meta gained as much as 18% in after hours trading on Wednesday, a sign of how negative sentiment had become towards the stock ahead of these results. With Reels monetization a priority in coming quarters and the growth of metaverse-related investments steadying, a messy and uncertain Meta Platforms investment story has gotten incrementally easier for investors to grok.

2) Spotify CEO says company is “vastly different” from Netflix as companies try to write new narratives amid streaming upheaval

  • CEO Daniel Ek emphasized the differences between SPOT and NFLX on the company’s first quarter earnings call on Wednesday.
  • Spotify reported fewer paying subscribers at the end of the quarter than expected.
  • Shares of the company fell 12% on Wednesday.

Titan’s Takeaway: As the “aggregator economy” matured through the 2010s, companies became verbs and these comparisons were used to flatter new entrants — “The Netflix of X,” “Uber for Y,” and so on. To hear Spotify executives explicitly tell investors they are not like Netflix shows just how different the landscape is as this new economic cycle continues to take shape.

3) Robinhood announces layoffs amid “hyper growth” phase ending as markets come down from Covid-era frenzy

  • The company said Tuesday it will lay off 9% of its staff.
  • Robinhood added over 3,000 employees from 2019 to 2021 during what its CEO called a period of “hyper growth.”
  • HOOD shares closed at a record low on Wednesday.

Titan’s Takeaway: Like many companies, Robinhood saw explosive growth during the peak of the pandemic and is being forced to make hard choices as behaviors across the economy normalize. We suspect HOOD will be far from the last company to make a similar announcement in the months ahead.

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