Amazon's EV-Propelled Growth | The Daily Peel | 2/4/22

Market Snapshot

Meta is on a mission to destroy happiness wherever it can, and yesterday, their focus shifted to stocks. Markets tumbled as that and many other large-cap names sold off in a frenzy. 

The Nasdaq plummeted 3.74%, while the S&P fell 2.44%, and the Dow lost 1.45%

Let's get into it.

 

Macro Monkey Says

Amazon Earnings - After falling 7.8% yesterday, we originally had Amazon in What's Rotten. But daaayumm, that earnings report caused a 180 real quick as its shares gained about 14.2% after hours. Let's check it out.

First of all, shares plummeted intraday, likely on spillover bearishness from Meta's embarrassingly horrific call on Wednesday. Amazon, on the other hand, killed it. 

Analysts were expecting a modest EPS of $3.77/sh from the firm for the quarter, but instead, and I promise this isn't a typo, Amazon reported $27.75/sh. Yup, you read that right. 

Net income doubled year-over-year all thanks to a damn good investment in a little-known EV firm called Rivian. Ever heard of it? Profits ballooned to $14.3bn in Q4 and an insane $33.4bn for the full year. 

Not that anyone cares, but revenue actually missed estimates, albeit very slightly. The retail business came in light while AWS, as always, did manage to beat sales expectations. 

In total, top line grew over 21% in 2021. Third in the world for most revenue earned in 2020, Amazon might just have dethroned the current champ and industry rival Walmart at this rate.

Records were broken like the Cybertruck's window back in late 2019. For starters, Black Friday, Cyber Monday, and the weekend days in between blew away previous year's numbers. Meanwhile, the month-long Great Indian Festival sales event also destroyed previous records for sales during this period. 

Amazon broke ground on its soon-to-open retail clothing store, Amazon Style, in which machine-learning and other magic will make you feel like you're shopping in 2050. Using the much-memed concept of Amazon Go, the firm partnered with fellow Washington-based company Starbucks to drive traffic into these brick-and-mortar locations. And lastly, you'll soon be able to venmo Bezos & Co. directly on their website.

It was a wild year for everyone, but clearly, it worked well for Amazon. The day before yesterday, we saw Meta bring the entire market down with it. Now we ask, will Amazon be the hero of today and lift everything up?

Winter is coming - One thing that Amazon can't lift up, however, is the temperature across the midwest and the southern U.S. Actually, I wouldn't even be surprised if they could. But we can confirm they haven't done it yet.

Yesterday, U.S. airlines canceled over 3,800 flights all over the place as Mother Nature heaped piles of snow and sucked the heat out of areas like New Mexico, Illinois, and once again, Texas. 

A range of 1-2ft of snow is projected to cover the grounds of Colorado and the surrounding areas, while the National Weather Service forecasted temperatures to feel as low as -5 degrees Fahrenheit in locations as far south as Dallas. 

Remember that whole Texas freeze thing last year? It's like that, but potentially way bigger and worse. We up north know a thing or two about snow, but down there, talking about snow is like talking to a Bostonian about being nice to people - they just don't get it.

 

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What's Ripe

T-Mobile U.S. ($TMUS) - Putting the entire Communication Services sector on its back, T-Mobile really went all-out for the team yesterday. 

The firm reported earnings before the bell, and Wall Street was loving it. EPS destroyed estimates, registering $0.34/sh against the $0.13 expected for the quarter, but revenue did come in just a bit shy at $20.8bn. 

As has been the case with basically everyone this earnings season, the true excitement came from 2022 guidance, with management seeing a 30% jump in free cash flow. With yesterday's 10.2% gain, it's confirmed – the Magenta Magic is back in action.

The Hershey's Company ($HSY) - Who wants some chocolate? Wall Street does for sure as it was paying 2.7% more by day end for pieces of Hershey's after seeing the company kill it on yesterday's earnings report.

The big dawg of the chocolate and sweets industry reported per-share income of $2.10, well above the $1.69 expected. In addition, sales also beat by slightly less than $100mm.

Price increase was the name of the game for Hershey's, jacking up costs for consumers in response to high-flying commodity prices, leading to lower sales volume. Still, they beat earnings, so does anyone really care?

 

What's Rotten

Social Stocks ($FB, $SNAP, $PINS) - Meta wasn't happy with causing depression in only their own users and shareholders. They just had to spread it to the entire industry. 

Wiping $250bn in market cap from themselves wasn't enough as fellow social stocks, those who primarily sell digital ad space, got rekt as a result of Meta's earnings report on Wednesday. 

Both Pinterest and Snap reported late yesterday, after cratering 10.3% and 23.6% respectively on the day, but traders couldn't have been more wrong. The two firms both beat the sh*t out of earnings and shot up after hours, with $PINS gaining almost 30% and Snap a monstrous 62%

Spotify ($SPOT) - Buuut, analysts aren't always wrong when it comes to trading into earnings reports. After losing almost 6% on Wednesday, Spotify crashed another 16.8% yesterday on not-even-bad earnings. 

Net loss was narrower than expected, burning only $0.21/sh while the Street expected losses of $0.58/sh. Revenue beat, users beat, but guidance for the upcoming quarter had analysts shook with management calling for significant slowdowns in user growth. 

Joe Rogan, is that you?

Thought Banana

Sucked Outta The Wormhole - Financial scams are as old as the hills. Cryptocurrencies are as old as the Obama administration. And when these two meet, it's always fun.

The second-largest DeFi hack ever occurred this week. The protocol in question, Wormhole, is one of the largest bridges facilitating transactions between Solana and other networks. 

Similar to Polkadot in the sense of interoperability being a primary goal, Wormhole saw over $320mm worth of tokens vanish from their network. Only the $600mm hack of Poly Network tops this in notional fiat value. According to Wormhole, the hackers liked wETH (Wrapped Ethereum) as their token of choice to pocket. 

Now, strangely enough, hacks aren't always all bad in cryptoland. White hat hacking is when expert hackers attack a network every way they can to exploit potential defects before actual bad actors can. 

In this tradition, Wormhole has made a trade deal, sending an on-chain message that read, "We'd like to offer you a white-hat agreement, and present you a bug bounty of $10 million for exploit details, and returning the wETH you've minted." 

$10mm in exchange for $320mm? Hmm… they didn't cover this one in The Art of the Deal… I wonder what they'll do.

Wise Investor Says

"In investing, what is comfortable is rarely profitable." - Robert Arnott

 

Happy Investing,

Patrick & The Daily Peel Team

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