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Results of technological giants: Apple, Facebook, Amazon

During yesterday's trading, the results of large technology companies, which have been driving stock market growth since the beginning of the pandemic, finally arrived. The most popular companies among investors generally reported better results, but even that was not enough to grow as their shares and negative sentiment prevails at the end of the week. Let's take a look at how individual companies reported and why we are not witnessing a greater buying appetite.

 

Apple

The company's total revenue grew $ 64.7 billion in the last quarter, exceeding expectations by approximately $ 1 billion. Sales declined for the second consecutive quarter. The company's net profit fell more than 7% to $ 12.6 billion from $ 13.7 billion last year. The company is largely dependent on iPhone sales, which fell 21%, largely due to the move of the new iPhone 12, well below analysts' expectations of 16.7%.

 

As can be seen in the table, the decline in product sales in China is largely worrying, despite the full opening of the local economy and the gradual recovery of demand. Sales in China fell 29% to $ 7.9 billion. However, the new iPhone 12 with 5G technology should perform very well in China. In other regions, sales more or less stagnated.

 

Looking at the development of product sales, a significant drop in sales of iPhones can be seen, however, the company managed to increase sales from Macs, iPads, and services. The services segment may also grow significantly during the next quarter as Apple launches Apple One and Fitness +. Although Apple did not release any outlook due to the ongoing pandemic, the last quartal is expected to look better, thanks to new products and the upcoming Christmas holidays, or Black Friday in the USA.

 

Graph: Apple sales by region and sales segment (Source: apple.com)

 

Facebook 

Facebook has again been able to find a way to profit, despite a boycott announced by a number of companies in early summer due to their allegedly insufficient effort to stop hate speech. The company's revenue grew 22% to $ 21.5 billion, comfortably exceeding analysts' expectations. Facebook reached 2.74 billion active users, which also exceeded expectations, although it saw an unprecedented decline in users in the US and Canada. The company's net profit grew 29% to $ 7.85 billion.

 

Until next year, Facebook said it expects a significant increase in uncertainty, which is mainly associated with the coronavirus pandemic. Its gradual disappearance will be a big test for the company, as the pandemic is behind the transition of companies from offline to online, where Facebook realizes the largest profits from advertising. However, companies and people still remain dependent on Facebook as the medium that unites them in these difficult times. The fourth quartal may still be profitable for the company, but next year it will face possible regulation due to its monopoly position and declining advertising revenues.

 

Chart: Daily chart of Facebook shares (Source: tradingview.com)

 

Amazon

Amazon's growth is unprecedented at first glance, and the company was able to surpass even the most optimistic analyst estimates in the third quartal. Amazon revenue grew 37% to $ 96.15 billion. The company's profit tripled to $ 6.3 billion. In addition to online commerce, where the company generates most of its profits, it also again managed to increase sales from cloud services (AWS), which is used by Apple, for example, by 29% to 11.6 billion USD. However, it is still a slow growth compared to other segments, but still larger than, for example, the company's total profit in Europe ($ 407 million). AWS's 3Q profit was $ 3.535 billion.

 

The company expects further growth in the next quarter when sales should be between 112 - 121 billion USD. Amazon estimates operating profit to be between $ 1 billion and $ 4.5 billion. The company benefits most from the current pandemic. Amazon's biggest shopping season is yet to come, and due to the pandemic, online sales can be expected to be huge. The number of employees increased by 50% year-on-year and the minimum wage in the USA is 15 USD / hour.

 

Graph: Amazon revenue segments (source: amazon.com)

 

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