Big companies are slowing down, smaller ones get hurt more
Two big tech, Microsoft and Alphabet, reported their quarterly results yesterday. Investors generally are expecting a slowdown so expectations aren't high to begin with. One reason is due to the normalisation after the Covid tech boom and the other is the economic slowdown at a global scale.
Microsoft reported a 12% revenue growth, although lower than the 20+% achieved during Covid, it is comparable to pre-Covid times. This is the normalisation I am referring to.
Alphabet looked weaker - revenue grew 13%, a far cry from the north of 30% growth during Covid. Even pre-Covid it was growing closer to 20%.
In particular, YouTube’s advertising grew just 5%. A signal that advertising spend has been reducing. This was the same case as with Snap where revenue growth used to be north of 40% but only did a 13% growth in the latest quarter. So don't expect Meta's results to be spectacular.
Walmart, ranked #1 on Fortune 500 by revenue, cut its guidance and confirmed the gloomy outlook. Blaming inflation, the company said that consumers are spending on necessities and less on other products. The rising costs have also compressed Walmart's margin.
Walmart expects the earnings to decline by 8-9% in the coming quarterly results that will be released on 16 Aug 2022. Share price closed 8% lower.
Not only that, it brought down other retailer stocks which include bellwether Amazon, which fell by 5%.
Shopify share price performed much worse, tanking by 14% at the end of the day. The results missed analysts' expectation in both revenue and earnings. The latter was problematic, it achieved $0.20 EPS when expectation was $0.63.
But I think it is the staff cut that sunk the stock most. Shopify announced laying off 10% of its workforce, or approximately 1,000 jobs. This is a sign of further slowdown ahead.
Alphabet CEO has said hiring will slow through 2023 but didn't offer any numbers. Its latest headcount rose by 21% in the recent quarter. That's a big jump. 'Slowing' may still mean Alphabet is hiring faster than other companies.
Microsoft was reported to have pulled out some job openings in the last week too. That said, Microsoft still expects a 10% revenue growth in the next quarter.
Generally we can see the slowdown has already happened but. The big companies are still seeing some growth in headcounts but the smaller ones are cutting.
Even consumer staples, always positioned as a defensive sector during the worst of times, are faltering due to inflation. There are not many places to hide.
Tough times ahead. Buckle up!
Microsoft reported a 12% revenue growth, although lower than the 20+% achieved during Covid, it is comparable to pre-Covid times. This is the normalisation I am referring to.
Alphabet looked weaker - revenue grew 13%, a far cry from the north of 30% growth during Covid. Even pre-Covid it was growing closer to 20%.
In particular, YouTube’s advertising grew just 5%. A signal that advertising spend has been reducing. This was the same case as with Snap where revenue growth used to be north of 40% but only did a 13% growth in the latest quarter. So don't expect Meta's results to be spectacular.
Walmart, ranked #1 on Fortune 500 by revenue, cut its guidance and confirmed the gloomy outlook. Blaming inflation, the company said that consumers are spending on necessities and less on other products. The rising costs have also compressed Walmart's margin.
Walmart expects the earnings to decline by 8-9% in the coming quarterly results that will be released on 16 Aug 2022. Share price closed 8% lower.
Not only that, it brought down other retailer stocks which include bellwether Amazon, which fell by 5%.
Shopify share price performed much worse, tanking by 14% at the end of the day. The results missed analysts' expectation in both revenue and earnings. The latter was problematic, it achieved $0.20 EPS when expectation was $0.63.
But I think it is the staff cut that sunk the stock most. Shopify announced laying off 10% of its workforce, or approximately 1,000 jobs. This is a sign of further slowdown ahead.
Alphabet CEO has said hiring will slow through 2023 but didn't offer any numbers. Its latest headcount rose by 21% in the recent quarter. That's a big jump. 'Slowing' may still mean Alphabet is hiring faster than other companies.
Microsoft was reported to have pulled out some job openings in the last week too. That said, Microsoft still expects a 10% revenue growth in the next quarter.
Generally we can see the slowdown has already happened but. The big companies are still seeing some growth in headcounts but the smaller ones are cutting.
Even consumer staples, always positioned as a defensive sector during the worst of times, are faltering due to inflation. There are not many places to hide.
Tough times ahead. Buckle up!
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Aurelian : $COIN blasting again tomorrow, bears trapped big time!
whqqq : Obviously. Many large companies are also laying off workers. However, in this period, large companies are more likely to survive than small companies.