The Worst Part of Meta’s Earnings Was… | The Daily Peel | 10/28/22

Oct 28, 2022 | Peel #326

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Market Snapshot

The worst part of Meta’s warnings was…

How management is running a good thing into the ground. Continuing to invest in the metaverse pipedream in a down market for ad spending is a head-scratcher.

Downtown Josh Brown said on CNBC that “this is a company with amazing fundamentals, horrendous sentiment…you’d rather it that way than the other way around.”

In other news, US GDP grew 2.6% in the quarter on the back of a resilient consumer.

Banana Bits

CNN employees were put on layoff notice this week
The DOJ has Tesla in its sights over statements about self-driving capabilities
Beantown hurdled San Francisco to become the second most expensive rental market (NYC is light years ahead in 1st)
Banks have begun sending Elon cash for his Twitter purchase, making the deal all but certain at this point

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Macro Monkey Says

The Renter Recession is Well Underway

If you live in a major metro, you’re used to getting f*cked on rent. But now, even the middle of the country is suffering from eye-watering price surges.

An “affordable” apartment used to mean one that ate 30% or less of your take-home pay each month. But that number is closing in on 50% in some cities.

More $ spent on rent = less disposable income for everything else, which is a bad sign for consumer spending
Landlords know that with 7% mortgage rates, buying a home is out of the question
Wide-ranging RTO mandates have dampened hopes that people would relocate to smaller cities and balance out rental markets across the country

It’s not just NYC and the Bay Area—YoY rents are up by 40% in Raleigh, 32% in Phoenix, and 26% in Memphis

Meme of the day

Source

What's Ripe

Shopify ($SHOP) ↑ 17.34% ↑

Shopify investors were begging for a strong end to the year after losing 75% YTD, and upbeat Q3 earnings helped recover some ground
It’s got a long way to go before it becomes a true Amazon killer, but small businesses rave about the service

Caterpillar ($CAT) ↑ 7.79% ↑

Strong digger demand and enough pricing power enabled $CAT to overcome higher component costs in the quarter
The stock is a proxy for the broader economy, and its strong performance is a good sign going into Q4

What's Rotten

Meta ($META) ↓ 24.56% ↓

Just waiting until Zuck decides to broadcast an earnings call all alone in the metaverse
Q3 was a sh*t sandwich…revenue down, losses expected to accelerate next year, no ROI from the metaverse in sight

Credit Suisse ($CS) ↓ 20.04% ↓

$CS is turning to the unlimited supply of Saudi wealth to pivot its business away from pesky Wall Street
Imminent collapse seems to be off the table for now, but investors were jittery about such a big change for the 166-year-old firm

Data Peel

Source

Thought Banana

Wonder Boy Founders Lose Their Luster

Whether Zuck is part robot or just a very strange human being, you don’t get onto the Forbes billionaire list without some combo of smarts and skill.

But founding a revolutionary company and riding a subsequent bull market wave is very different from executing a massive pivot just as a recession hits.

His supervoting shares give him near-total decision-making power
Internal memos show many Meta employees think the metaverse is a waste of time, and the company has had to beg them to spend more time within it
The dude has made it clear he doesn’t give a f*ck what people think, including his investors
Snap is another high-profile meltdown with a founder that calls all the shots

The big question: Will investors reject the kind of unilateral power Zuck has from other founders in the future after seeing his decisions crater the company?

Banana Brain Teaser

Yesterday — I know a word; six letters it contains. And yet, if you take one away, twelve is what remains. What’s the word?

The word “Dozens.”

Today — It’s 200 bananas off the Elite Modeling Package. LFG!

Dead on the field lie ten soldiers in white, Felled by three eyes, black as night. What happened?

Shoot us your guesses at [email protected] with the subject line “Banana Brain Teaser” or simply click here to reply!

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