When people ask why the stock market isn't in the dumps when it feels like the whole economy is stopped, this is why. Small business isn't on the S&P, and out of the businesses in it, a large percentage of the market value is concentrated on the tech giants who aren't getting nearly as affected by the current crisis as everyone else. If they don't actually benefit from it. Still super impressive results.
Apple is doing... OK. They are still down 13% from their highs.
Boeing is trashed and announced layoffs.
GM is as well and are suspending their dividend, Ford isn't exactly happy either, and plenty of other S&P giants.
Disney has taken a huge hit due to sports/ ESPN revenue, theme parks, and cruise lines.
Small businesses aren't on the S&P 500, but unemployed people and small businesses all buy from companies in the S&P 500.
Apple also happens to have a massive cash pillow to soften their fall. Nobody else has reserves like Apple and a lot of companies have substantial debt.
The stock market hasn't quite priced in damage yet.
> The stock market hasn't quite priced in damage yet.
Quite the claim. Anyone with confidence in this theory should take a short position now and pick up their million bucks after the market “prices in the damage.”
Keep in mind they have a significant presence in Asia, they felt this for nearly the entire quarter.
Plus like Facebook, it's not all straight down. Tim Cook:
> “We’ve seen a further change in the last part of March and first part of April were very depressed and then we’ve seen a pick up relative to that period of time in the second half of April"
They also announced $50b more in buybacks. Apple is confident in a way that most businesses are not.
Macy’s, Boeing, United, Carnival, GE, Ford, and so on.
The tech companies are important, but the overall stock market is a lot bigger than them. The companies listed above are in bad shape, but their stock should be in worse shape. Why they aren’t is the same reason the market is up. My guess? Wait for the second drop to be bigger and more brutal than the first (although it may take longer to drop).
The thing is that the restaurant has waiters. Those waiters don’t take a vacation because they can’t afford it so Boeing doesn’t sell planes. Boeing isn’t growing so they lay off engineers who now don’t upgrade their iPhones. And Apple will suffer, just awhile from now.
This is not true. The mega-wealthy aren't needing to sell their assets because the Fed is doing unlimited QE. Since the mega-wealthy own most stocks, they don't need the liquidity when their "stable" investments are backed by the Federal Reserve's unlimited free money program. This is crony capitalism.
Wouldn't the mega-wealthy be the ones who'd be least likely to need to sell anyway? Versus people with investments that they want to liquidate for a buffer after losing a job, or retirement?
Surprised why so many people are surprised. Digital services and platforms are booming in this current climate. We have no choice but to be consuming content.
App downloads (30% thank you very much), Apple TV+ ($10 a month thank you very much), Apple Music...the list goes on. That list, apart from TV+ specials, is just revenue on the backs of other work. Others taking advantage of lockdown to product more content. Which makes these companies more and more without lifting a finger. And the Apple TV specials are short change. Just drive growth.
Microsoft, Amazon, Netflix, remote tools like Mural and Zoom, all these digital platforms offering consumer and business services are king right now. Ad supported services are booming, the Facebooks, Googles, because we’re consuming more ads.
It’s the cash cow of the 2010s and 2020s. Corona is only accelerating that.
But ads are supposed to be paid back by customers buying real stuff. And if they won't buy real stuff because of crisis, it just means that ads budgets will be cut soon.
I wonder what fraction of consumption people who’ve been lost their income during the crisis is. If 20% of the workforce is laid off, does that mean consumption will go down 20%? Is the salary/spending power of the group who were laid off representative of the entire workforce? Or does it skew in a particular direction.
I ask because one explanation of the disconnect is that consumer spending in general hasn’t actually dropped that much, it’s just moved away from in-person small businesses.
If you have the free TV+ you should watch. Many of the shows have been really good in my opinion. Haven't watched one of the shows (besides See) that I didn't think were pretty well done.
> Ad supported services are booming, the Facebooks, Googles, because we’re consuming more ads.
Ad revenue is flat YOY. That's normally death for these companies. In these times, it's positive relative to the market, but that's not what your assertion is.
It’s annoying that Apple is given a free pass on pushing media-centric devices and claiming that services are their future, but then making it HARDER for customers to consume those services, with offensive moves like deleting headphone jacks and reducing battery size.
Consuming more ads only helps ad-servers when there are enough ads to serve. A lot of big advertising categories (travel, cars, restaurants) are having a tough time and will likely cut their ad spending.
Apple TV+, Apple Music, and Netflix revenues have nothing to do with ads.
EDIT: parent comment was significantly changed after I replied to it. Initially, it was saying that "Apple TV+, Apple Music, Netflix, and Microsoft" were having a tough time and that their ad-serving customers will likely have to cut their ad spending.
Hold onto your hats though when companies release results next quarter (in early July).
Consumer spending is way down across the board (everything from appliances to travel). Early indications are the stimulus checks are being saved or used to pay off existing debt - not consuming/purchasing.
The ripple effect of this sudden drop will likely be unprecedented.
That's because it's not a stimulus cheque. It's an insurance payment. You can't stimulate the economy while you're (for good reasons) shutting it down. I don't know how it is in the US but here in France I can't even go buy an appliance, or to the restaurant, or even get a fucking haircut.
does anyone have a good definition of services without bundling in fees paid by google etc to be default search engine. one thing to note though, is services is an excellent business $13bn qtr revenue, $4bn short of FB quarterly revenue.
Readit News
Boeing is trashed and announced layoffs.
GM is as well and are suspending their dividend, Ford isn't exactly happy either, and plenty of other S&P giants.
Disney has taken a huge hit due to sports/ ESPN revenue, theme parks, and cruise lines.
Small businesses aren't on the S&P 500, but unemployed people and small businesses all buy from companies in the S&P 500.
Apple also happens to have a massive cash pillow to soften their fall. Nobody else has reserves like Apple and a lot of companies have substantial debt.
The stock market hasn't quite priced in damage yet.
Quite the claim. Anyone with confidence in this theory should take a short position now and pick up their million bucks after the market “prices in the damage.”
My only point here is this is an arbitrarily picked set of companies and it should be put into context with surrounding S&P500 data and analytics.
Plus like Facebook, it's not all straight down. Tim Cook:
> “We’ve seen a further change in the last part of March and first part of April were very depressed and then we’ve seen a pick up relative to that period of time in the second half of April"
They also announced $50b more in buybacks. Apple is confident in a way that most businesses are not.
The tech companies are important, but the overall stock market is a lot bigger than them. The companies listed above are in bad shape, but their stock should be in worse shape. Why they aren’t is the same reason the market is up. My guess? Wait for the second drop to be bigger and more brutal than the first (although it may take longer to drop).
Dead Comment
App downloads (30% thank you very much), Apple TV+ ($10 a month thank you very much), Apple Music...the list goes on. That list, apart from TV+ specials, is just revenue on the backs of other work. Others taking advantage of lockdown to product more content. Which makes these companies more and more without lifting a finger. And the Apple TV specials are short change. Just drive growth.
Microsoft, Amazon, Netflix, remote tools like Mural and Zoom, all these digital platforms offering consumer and business services are king right now. Ad supported services are booming, the Facebooks, Googles, because we’re consuming more ads.
It’s the cash cow of the 2010s and 2020s. Corona is only accelerating that.
I ask because one explanation of the disconnect is that consumer spending in general hasn’t actually dropped that much, it’s just moved away from in-person small businesses.
Anecdotally, I have 1 year of free TV+ and Apple TVs, but I don't use it to watch TV+ (watching Netflix, Youtube, etc. instead).
Ad revenue is flat YOY. That's normally death for these companies. In these times, it's positive relative to the market, but that's not what your assertion is.
EDIT: parent comment was significantly changed after I replied to it. Initially, it was saying that "Apple TV+, Apple Music, Netflix, and Microsoft" were having a tough time and that their ad-serving customers will likely have to cut their ad spending.
Consumer spending is way down across the board (everything from appliances to travel). Early indications are the stimulus checks are being saved or used to pay off existing debt - not consuming/purchasing.
The ripple effect of this sudden drop will likely be unprecedented.
>>> Apple today announced financial results for its fiscal 2020 second quarter ended March 28, 2020.
The shutdown started on Jan. 23 and things were already reopening by mid-February, and mostly back to normal in March.
https://www.theverge.com/2020/2/13/21136648/apple-beijing-st...
https://www.theverge.com/2020/3/13/21177964/apple-stores-chi...
0.5%, with services (+17%) and wearables/home/accessories (+23%) offsetting the decline in iphones/ipads/macs.