Facebook Loses 7% Despite Crushing Earnings Estimates, Plus Fitbit’s Sales Are Down…WAY Down

By 11.03.16

morning-brew-new

“The saga is over” — Gawker CEO Nick Denton, after settling the four-year Hulk Hogan invasion of privacy case that ultimately bankrupted his company.

Market Snapshot

  • U.S. stocks finished lower again yesterday, with the S&P 500 falling again for its longest losing streak in five years (that sound you hear in the distance is Cubs fans scoffing)
  • Oil prices also fell after the U.S. released “the most bearish report of all time“—investors expected a one million barrel increase, but were instead sucker-punched with a 14 million barrel increase—the largest weekly increase in 34 years of collected data

Toss This A Like

…Facebook (-7.12% after hours) crushes earnings and sees profits soar. So why did the stock dive after hours? The social network cautioned that its ad load—aka the number of ads on its website—could “come down meaningfully” in 2017, which would mean slower revenue growth. Nevertheless, this monster third quarter marks the sixth straight quarter that Facebook has beat expectations. Nice. What’s next? Facebook will continue its plans to become a “video-first” platform (hi, Facebook Live) while also monetizing WhatsApp and Facebook Messenger.

Fitbit’s Sales Look…

…Unhealthy. The wearable tech giant reported rough Q3 earnings yesterday (-30% after hours…no typos here). It wasn’t so much the past quarter’s mediocre performance—although that didn’t help—as much as the company announcing a dismal holiday season sales forecasts. Analysts were forecasting holiday revenues of $985 million, but Fitbit psyched everybody out with forecasts of about $750 million. Why the change? Put the blame on the company’s transition to newer products, softer wearable tech demand and a production issue with the new Flex 2 band.

Uber’s Getting a Makeover

…But it’s not just about looks. The ridesharing service is releasing a new version of its app with a snazzy new design. How snazzy and new? For starters, it’s the app’s biggest redesign since debuting in 2010. The name of the game this time around: simplicity. First off, say goodbye to surge pricing (kind of). To be clear, you’ll still be charged surge prices, Uber just won’t tell you when it’s happening now…lovely. And perhaps the biggest change of all: Uber will start integrating with outside services, like your calendar, Snapchat and Yelp. It’s all in an effort to keep in you in the Uber app for longer, providing more opportunities for monetization. Ride sharing, food delivery, self-driving cars and now an all-new app experience…Uber ain’t playing.

Status Quo?

…We’ll see about that. It was pretty much a foregone conclusion, but yesterday the Federal Reserve kept interest rates unchanged at its latest policy meeting, prompting many to bet on December, a time when the economy typically gains momentum and inflation starts picking up. If the rate hike does indeed go down over the holidays, it’ll be at the one-year anniversary of the last increase; rates have not budged since last December over worries about less-than stellar growth. Wild card: the upcoming election might just change things—here’s waiting ‘til Tuesday.

Chipmakers, Unite

…Things are moving fast. The latest move: chipmaker Broadcom (+2.23%) is acquiring Brocade (+9.61%) for more than $5 billion. Why does this matter? The chip sector is consolidating, and Brocade’s equipment communications technologies will give Broadcom an edge to corner more of the changing market. Broadcom seems to have its eye on the networking storage part of the business—a nice cherry on top.

Other Stories

Economic Calendar

Slack v. Microsoft: The Gloves Are Off

Let’s introduce the players. In one corner is Slack, a cloud-based collaboration and productivity company (think GroupMe on steroids and for businesses). Let’s call Slack the undisputed champion of modern workplace communication. In the other corner: Microsoft, which yesterday debuted a direct competitor to Slack called Microsoft Teams. Slack didn’t take the punch sitting down though. Its counterpunch: taking out a full-page ad in the New York Times to troll Microsoft. Here are some of the most memorable quotes:

  • “If you want customers to switch to your product, you’re going to have to match our commitment to their success and take the same amount of delight in their happiness.”
  • “We know that playing nice with others isn’t exactly your MO, but if you can’t offer people an open platform that brings everything together into one place and makes their lives dramatically simpler, it’s just not going to work.”
  • “So welcome, Microsoft, to the revolution. We’re glad you’re going to be helping us define this new product category. We admire many of your achievements and know you’ll be a worthy competitor.”
  • “One final point: Slack is here to stay.”

Interview Question of the Day

There are two ducks in front of a duck, two ducks behind a duck and one duck in the middle. How many ducks are there? (Answer)

Startup of the Day

Palantir helped prosecute Bernie Madoff, locate Osama Bin Laden, track down hacker groups and uncover human traffickers. How? The wonders of big data analysis. The company sells software that draws correlations and identifies relationships in seemingly unrelated information. The input could be anything—phone numbers, bank records, license plate numbers, etc. Oh, and its latest valuation: a casual $20 billion.

Food for Thought

It cost about $19,500 for a seat behind the visiting Chicago Cubs dugout for game seven of the World Series last night. And in case you weren’t watching, it was played in Cleveland. Those loyal Cubs fans are looking pretty smart right now, as the Cubs broke a 108-year World Series drought in an absolutely epic, extra innings victory over the Indians.


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