Domain Daily: Big Wins for Apple and Amazon

The Dose

  • Apple Sales Record

  • Amazon Impresses

  • Roku Misses the Mark

Apple Sets Quarterly Revenue Record

The tech giant reported $83 billion of revenue for its latest quarter, the company's biggest haul ever.

The Point: Not only did that set a new high watermark, but it also exceeded Wall Street's expectations. Following the announcement, Apple's stock jumped by more than 3%. On the flip side, Apple's profit fell by 10.5% year-over-year. Still, the market was impressed by the results. Profit is what matters. But with inflation on the rise, investors are willing to give established companies like Apple the benefit of the doubt so long as sales continue to trend upward. The bet is that Apple's profit will come back in line once it can raise its prices or contain rising production costs.  

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Amazon Loses Money, But Stock Soars

Despite reporting a net loss of $2 billion, Amazon's stock gained more than 12% following its earnings report.

The Point: Like Apple, Amazon's revenue outpaced analysts' expectations. And just like we said above, investors trust that companies like Amazon will return to their normal profitability levels. So while rising costs are undoubtedly weighing on Amazon's profitability, the real reason for the quarterly loss was due to its investment in EV maker Rivian. Amazon marked down its investment in the company for the second quarter in a row. If you exclude the Rivian loss from the calculation, Amazon turned a 10-cent per-share profit during the quarter. That was still below the consensus analyst estimate (13 cents), but hardly a disastrous result.  

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Roku Sputters On Faltering Ad Sales

The streaming device company missed Wall Street estimates for both earnings and revenue. Its shares plunged by more than 25% on the news.  

The Point: Roku is tied at the hip to streaming platforms like Netflix. We already knew that Netflix was losing subscribers, so this was certain to be a rough quarter for Roku. However, the results were far worse than expected. So, just how bad was it? Bad enough that Susquehanna cut its stock price target for Roku from $200 per share to just $70. And Roku withdrew its previously stated growth estimate for the year. As you might expect, Roku blamed deteriorating economic conditions for its troubles. "We believe this pullback mirrors the start of the pandemic in 2020, when marketers prepared for macro uncertainties by quickly reducing ad spend across all platforms," Roku wrote in a letter to shareholders. Whatever the cause, the poor showing will only fuel rumors of Roku being a buyout target.  

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*The content team responsible for the above content uses primary and secondary sources they believe to be accurate, which includes but is not limited to Bloomberg, The Wall Street Journal, Financial Times, and CNBC, among others. 

*Domain Money Advisors, LLC, an investment adviser registered with the U.S. Securities and Exchange Commission and an affiliate of Domain Money, has (as of this writing) the following assets mentioned in this communication as part of its managed portfolios: AAPL, AMZN