Big Tech Fall Hard | The Daily Peel | 10/27/22

Oct 27, 2022 | Peel #325

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Market Snapshot

Meh Q3 results from Microsoft and Alphabet point to an ugly upcoming report from Meta, and all three weighed on the Nasdaq Wednesday.

Oil prices jumped on the back of U.S. crude exports hitting record highs and a weakening dollar.

Bond yields are retreating, with the 10-year yield losing nearly 30 basis points in the past week.

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What's Ripe

What's Rotten

Spotify ($SPOT)

• A week after its Netflix feature was released, $SPOT reported a loss of 1 euro/share in Q3 and barely met its revenue target
• Price increases could be a necessary evil to protect margins amid a weakening ad spending market

Alphabet ($GOOGL)

• Like its smaller Swedish cousin, Alphabet is being forced to reckon with slower online ad spending
• Most concerning is the slowdown in YouTube and online search revenue, which have been cash machines in the past

Data Peel

Source

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One Swedish Boi vs. Trillions

Imagine hearing a few decades ago that a Swedish startup would hold twice the music market share as the maker of the iPod.

It’s been an improbable rise, and Spotify is on a mission to own the market for everything that hits your ears.

• Spotify has a vice grip on the music streaming market, but lags behind Apple and Amazon in podcasts and audiobooks, respectively
• Apple controls how most of Spotify’s users reach its service, and it’s exploited this benefit before (just ask Meta)
• Daniel Ek and team are taking the fight to antitrust court, and judges could be the ones that ultimately determine a winner
• Apple can lose plenty of money in music without pissing off investors. Spotify can’t.

The big question: Will an industry backlash against Apple exploiting its gatekeeper position force it to allow more competition in the App Store?

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