Hey Snackers,
The oldest-known animal drawing in the world has been found: it's a warty pig.
Stocks plunged yesterday, with all three major indexes falling more than 2% ahead of strong earnings from Apple, Facebook, and Tesla. Meanwhile, companies that are far from posting strong earnings — like AMC and GameStop — soared. We're talking "cyberbulling" (Part 2).
PS: To learn more about stock market volatility and what it could mean for your portfolio, check out our mini-explainer.
The Rise of "Cyberbulling" — what AMC and GameStop have in common
2003 Nokia camera phone... Now that's nostalgic. Yesterday, we covered GameStop's "cyberbulling" stock surge. Cyberbulling: when people who are "bullish" on a stock stoke massive buying campaigns of that stock on social media (especially: Reddit, Discord, TikTok). One of the earliest cyberbulling episodes happened back in June, when bankruptcy-bound Hertz saw its shares inexplicably soar 900%. But...
- Cyberbulling has never been as prominent as it has been this week: While the broader market plunged yesterday, throwback stocks like GameStop, AMC, Nokia, and even Tootsie Roll, soared thanks to cyberbulls.
- This headline pretty much sums it up: "Nokia not aware of any reason for share surge." The stock popped 39% yesterday.
- Cue the trading halts: Shares of GameStop, BlackBerry, and AMC were temporarily paused from trading by the NYSE because of their stocks' volatility. GameStop was halted nine times.
1M+ "degenerates"... One wild stat shows what an unprecedented week it was for cyberbulling. The number of subscribers (self-described "degenerates") to the r/wallstreetbets subreddit jumped from 2.4M on Tuesday to 3.9M on Wednesday. But the group's Discord server was banned yesterday (for allowing hate speech). A few factors driving the cyberbull surge:
- “Little guy vs. big guy” mentality: Some cyberbulls feel they're shifting the power dynamic by betting against Wall Street — after feeling historically wronged by big shots like banks and hedge funds. Funds that were betting GameStock would fall — like Melvin Capital and Maplelane — lost billions after cyberbulls pumped up the stock.
- Community: Cyberbulling is also fueled by a strong sense of (cyber) community. Like: people posting screenshots of gains, thanking the "community" for helping pay off student loans and hospital bills.
Cyberbulls are dependent... on people continuing to buy a stock on (potentially baseless) momentum. Normally, there are quantitative factors people use to judge investments. For example, people who invest in dividend-paying companies "rely" on those payouts. People who invest in cash-rich companies might expect share buybacks, which can increase the value of a stock. And people who invest in growing companies might expect the value of their shares to rise long-term. But cyberbull stocks risk crashing as soon as momentum stops.
Apple's biggest quarter ever: iPhone is the star, but also the anchor
Be humble, sit down... Yesterday, Tesla reported a respectable $11B in sales for its fourth quarter. Facebook followed up proudly with an expectation-beating $28B in sales. Then Apple stomped in with...
- $111B in sales: It's the first time Apple has crossed the $100B mark for a single quarter. That's nearly 3X Facebook and Tesla's quarterly sales combined.
- $28.8B in profit: Apple's mind-boggling quarterly profit is one of the largest in history for any company. Ever.
All eyes on iPhone (12)... iPhone sales consistently make up over half of Apple's total sales, but they fell in 2019 and 2020. Last quarter, sales for every single product category jumped by double-digit percentage points. And the star of the quarter was (finally) iPhone.
- iPhone sales soared 18% to $66B, driven by the launch of iPhone 12 last fall. Apple's first 5G rectangle spurred a fresh wave of upgrades.
- Apple made $10B more from iPhone sales last quarter than it did in the first quarter of 2020. That $10B extra = more than total Mac sales last quarter.
- Honorable mentions: Services sales (think: App Store, Music) jumped 24% to nearly $16B, making it the 2nd highest-grossing category after iPhone.
iPhone = a profit today + a bonus profit tomorrow... Apple is the most valuable company on Earth, in part thanks to its self-serving ecosystem. Last quarter, iPhones accounted for 58% of Apple's total sales. But each iPhone anchors users into Club Apple's connected world. iPhone sales drive growth for other products, from AirPods to Apple Books. With the recent launch of the "Apple One" subscription, Apple might soon have us more locked in than ever.
What else we’re Snackin’
- Musky: Tesla posted a fourth quarter profit, capping off its first profitable year with 28% sales growth from 2019.
- Downer: Boeing lost a record ~$12B last year, as the pandemic battered demand for long-haul jets.
- Tok: TikTok-parent ByteDance reportedly saw sales more than double last year, despite being banned in India (and nearly banned in the US).
- Booked: Facebook beat quarterly earnings expectations thanks to strong ad demand. Full-year sales were up 22% from 2019.
- Fuel: GM partnered with Navistar to supply fuel-cell technology for its new semitruck.
Thursday
- Weekly jobless claims
- Earnings expected from Visa, Mastercard, McDonald's, and Altria
Authors of this Snacks own shares of: Apple, Tesla, and Starbucks
ID: 1500142