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Big Tech’s Big Thursday: Q3 Earnings Highlights and Lowlights

AP Photo. VIP

All of big tech just reported their calendar year Q3 earnings, but only one tech giant posted a noticeable gain during after-hours trading. Here’s a look at why and the biggest takeaways from today’s earnings madness:

Twitter Gets Punished on Key Metric Miss 

Sure, Twitter missed consensus estimates for its most closely monitored metric — monetizable daily active users (mDAU). And sure, it was the company’s smallest increase in mDAUs since Twitter started reporting that metric in late 2017. That being said, Twitter stock’s 16% plunge in afterhours trading (at the lows) seemed excessive, especially when every other metric saw solid increases. Overall revenue jumped 14% in Q3, and the ad business saw a nice recovery and rose 15% from last year. Additionally, mDAUs actually grew 29% from the year ago period, so maybe the issue was with Wall Street’s lofty expectations.  

Alphabet Crushes Revenue Expectations Amid Ad Rebound

Alphabet shares rose more than 8% after the company reported it crushed revenue and earnings expectations ($16.4 billion versus $11.3 billion expected and $16.4 per share versus $11.29 expected, respectively). The revenue results were linked to advertisers returning to Google Search and YouTube ads in the quarter: Google/Alphabet CFO Ruth Porat noted the company benefitted from an improvement in ad spend “across all geographies in nearly all verticals.” But Porat cautioned against lofty Q4 expectations, citing “uncertainty in the external environment,” likely referring to the omnipresent virus.  

Alphabet’s results are promising for investors and serve as some of the latest proof of the recovering ads business in the U.S. Other earlier earnings calls by companies like Snap and Omnicom, which were less battered by the pandemic in Q3 versus Q2, hinted that Alphabet would do well in Q3. 

The Apple Narrative Is Still All About the iPhone 

Remember when we almost thought Apple could be something more than an iPhone company? Well, what we learned Thursday is Apple is still very much an iPhone company, and it couldn’t have been clearer following the company’s Q4 financial results. 

Here’s what happened: Apple reported better-than-expected results across the board from earnings, revenue, Services revenue, Mac revenue, iPad revenue to even other products revenue, but it also reported softer-than-anticipated iPhone revenue. The stock fell 5% immediately after in extended trade. Additionally, the tech giant’s move to refrain from providing any guidance for the holiday quarter could also have had something to do with the substantial downside move. One thing investors and consumers can look forward to is the launch of the Apple One bundle on Friday. 

Amazon Continues to Reap COVID Benefits

It was another huge quarter for Amazon. The e-commerce giant’s net sales in Q3 rose 37% from last year and operating income increased to $6.3 billion. Net sales of Amazon’s “other” segment, which primarily includes sales of advertising services, jumped 49% year-over-year. Advertising may still be a small part of Amazon’s overall business but is increasingly becoming an important one. Shares of Amazon fell about 2% in after-hours trading Thursday following a 74% run so far this year. The company expects operating income of $1 billion to $4.5 billion in the fourth quarter, compared to $3.9 billion in Q4 of 2019. It expects roughly $4 billion in COVID related costs.

The company highlighted several of its recent originals like the “Borat” sequel and “The Boys,” but in typical Amazon/SVOD fashion didn’t disclose viewership figures for them in its earnings report. It did, however, recently dispute third-party “Borat” viewership estimates and said “tens of millions” watched the sequel.

Facebook Fails to Impress Investors Despite Ad Rev Jump

Facebook’s stock price wavered between small increases and decreases but remained relatively flat after it reported beating earnings ($2.71 per share versus $1.91 expected) and revenue ($21.47 billion versus $19.8 billion expected) but a 1 million decrease in monthly users in the U.S. and Canada. That drop might have caught some off guard, although Facebook did warn it could happen during its Q2 earnings. The company’s overall MAU base did jump a little over 1% from Q2, with the Asia-Pacific region driving that growth.  

Perhaps the most closely watched stat was Facebook’s ad revenue, which some investors worried could be affected by the brand ad boycott during the quarter. However, Facebook’s ad revenue was up almost 16% from Q2 and 22% year-over-year, which is the latest evidence that big tech platforms can misbehave and still win back ad clients (shoutout to YouTube).