Alphabet, Meta Platforms, and PayPal Reports: Weekly News Digest (31 January - 4 February)
We've picked up the most important details for you from the quarterly reports of such corporations as Alphabet, Meta Platforms, and PayPal. We will speak about the financial statistics of these companies over the previous quarter and year, and examine how their shares reacted to these.
Alphabet report: advertising now brings in 33% more
On 1 February 2022, Alphabet shared its financial results of October-December and the whole of 2021. Alphabet is the parent company of Google. Out of all the indices, only YouTube's quarterly revenue did not live up to Wall Street analysts' expectations: $8.63 billion against the forecast of $8.87 billion.
The revenue generated by the whole of Google Ads business amounted to $61.24 billion, which is 32.6% compared to the results of the same period in 2020. Out of this amount, $43.3 billion were generated by ads in the search system. In Q4, this saw a 35.7% growth.
|Revenue||$75.33 billion (+32.3%)||$257.64 billion (+41.2%)|
|EPS||$30.69 (+37.6%)||$112.2 (+91.4%)|
|Net profit||$20.64 billion (+35.6%)||$76 billion (+88.8%)|
Alphabet announced a 20-for-1 stock split
The board of directors of the IT giant suggested carrying out a split of A, B, and C class stocks at the ratio of 20:1. This decision now remains to be considered by the shareholders. If the 20-for-1 split takes place on 15 July 2022, then after the trading session closes, each shareholder will receive a dividend of 19 new shares of the corresponding class in addition to each Alphabet share in their portfolio.
The aim of the split is to make Alphabet shares more available and attract more investors. After the split, the shares will hit the levels of 2005.
The reaction of Alphabet shares
On 2 February 2022, the price of A-class Alphabet Inc. (NASDAQ: GOOGL) stock increased 7.52% to $2,960. This is the largest daily growth of Alphabet's stock prices in 2022.
On 3 February 2022, the decline of Meta Platforms shares dragged the whole tech sector down, with Alphabet stock also following the downtrend and losing 3.32% to reach $2861.8. Alphabet soared by 65.3% in 2021, but since January this year, it has only grown a mere 1.2%.
PayPal earnings report: net profit drops 49%
On Tuesday, 1 February 2022, PayPal presented its earnings report for the last quarter and 2021. The company announced a striking decrease in the quarterly profit and voiced a pessimistic forecast for the current year. The reason for this is the loss of eBay as a client.
PayPal predicts its yearly revenue to grow by 15-17%, while Wall Street experts forecast an 18% increase on average.
As for the EPS, the company expects $4.6-4.75 by the end of 2022. Analysts, again, forecast more – $5.21 per share.
Moreover, PayPal backed off its earlier target of reaching 750 million active accounts. It predicts for 15-20 million more new accounts in 2022. While the market expected PayPal to attract over 50 million new users this year.
|Revenue||$6.9 billion (+13%)||$25.4 billion (+17%)|
|EPS||$0.68 (-49%)||$3.52 (-1%)|
|Net profit||$0.8 billion (-49%)||$4.2 billion (-0.8%)|
The reaction of PayPal shares
On 2 February 2022, following the publishing of the report, and after PayPal Holdings Inc. (NASDAQ: PYPL) presented its forecast, the shares of the company dropped 24.59% to $132.57. The negative trend was preserved on the next trading day: on 3 February 2022, the shares lost 6.24% more, reaching $124.3. PayPal stock lost 19.5% in 2021, and since the beginning of 2022, it dropped by another 34.1%.
Meta Platforms report: number of Facebook users decreases
With Meta Platforms now shifting its focus to the metaverse, the financial performance of Reality Labs is of the greatest interest. The operational losses of this department, which invests in the metaverse and virtual reality, reached $3.3 billion.
Facebook's number of daily active users has dropped for the first time in its 18-years history. Compared to the statistics of Q3 2021, the index has dropped 0.05% to 1.929 billion users.
Investors became even more worried when they heard the forecast of Meta Platforms for Q1 2022. The corporation expects revenue to reach $27-29 billion, which is $1.15-3.15 billion less than experts forecast. The growth of revenue might reach 3-11%, which is the most modest result in the history of the tech giant.
|Revenue||$33.7 billion (+20%)||$117.9 billion (+37%)|
|EPS||$3.67 (-5%)||$13.8 (+36%)|
|Net profit||$10.3 billion (-8%)||$39.4 billion (+35%)|
The reaction of Meta Platforms shares
On 3 February 2022, the next day after the financial statistics were out, the shares of Meta Platforms Inc. (NASDAQ: FB) dropped 26.39% to $237.76. According to Bloomberg, the market capitalisation of the company shrunk by $251 billion – marking the largest ever daily decline of the market cost of a company in the history of stock markets.
In 2021, Meta Platforms shares grew 23%, seeing a 29.3% loss since the beginning of 2021.
Alphabet reported growth of quarterly and yearly net profit by 36% and 89%, respectively. It also plans to carry out a stock split at the ratio of 20:1. The shares of the corporation reacted by growing over 7%.
According to the PayPal report for Q4, net profit declined by 49% and the shares lost almost 25%.
The results of October-December 2021 made the share price of Meta Platforms collapse by over 26%. The decline of the market cost of the company hit a record of over $250 billion during a trading day.