Twitter Releases Surprising Q4 Earnings Despite Shrinking Audience, Tesla Posts Big-Time Loss Yet Shares Still Soar

by 4 years ago

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“This is probably the most obvious product launch ever” — Burger King North America President Alex Macedo. B.K. announced it will be adding hot dogs to its menu starting February 23. Don’t worry, Whoppers aren’t going anywhere.

MARKET SNAPSHOT
Big Picture

  • U.S. markets extended their losing streak to four days, with all eyes on Federal Reserve Chairwoman Janet Yellen’s Congressional testimony (more on that shortly)
  • Chinese markets re-opened last night after taking a few days off for the Lunar New Year, and caught up to the rest of the world in a hurry, falling around 4%

Alternatives to Watch

  • Oil was all over the map yesterday, but ended nearly 2% lower as the ongoing global supply glut seemed to weigh more on investor sentiment than a surprise decrease in U.S. crude stockpiles

Market Movers

  • The Brew warned about companies chalking up huge losses to share buyback programs in yesterday’s issue, but Amazon isn’t taking the hint: it announced a $5 billion share repurchase program, which pushed shares up a bit, but its stock remains negative on the year

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U.S. MACRO

Yellen’s Economics Lesson

Janet Yellen was back in the spotlight yesterday to clear up some information about the U.S. economy. Despite the fact that the global economy doesn’t seem to be in great position, the jobs market (and inflation…kinda) are doing well—and they’re the Fed’s favorite economic markers. The strength of the U.S. dollar (which hurts U.S. companies with international exposure) could pose some threats in the future, possibly delaying a further rise in interest rates, but Yellen assured us that we’ve got plenty of time until March for the global economy to improve.

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CORPORATE PRIMER

Wall Street Gods Favor Tesla

These are strange times for Wall Street—good news is making stocks fall and bad news is making stocks rise. Yesterday, Tesla posted a big-time loss even though the Street expected positive earnings (duh), yet shares still soared over 10% after hours. Indeed, there’s positivity on the horizon: Tesla will be delivering even more cars this year than initially thought, and Elon Musk expects his company to be cash-flow positive in 2016. Either way, Wall Street remains nothing short of a jungle to navigate.

Roadblocks Removed

What we only thought possible in the distant future is knocking on the door today, and regulators are opening that door. Elaborate metaphors aside, yesterday the National Highway Traffic Safety Administration told Google it would consider artificial intelligence systems as drivers. In fact, the NHTSA said it will waive some traditional safety guidelines in order to speed up the process for self-driving cars to hit the road. Chalk one up for the self-driving car revolution.

Twitter Shrivels Up

It’s been a rough year for Twitter to say the least (and we mean the least), and things may not be improving. Yesterday, the floundering social media site released surprising Q4 earnings, breezing by analyst financial expectations. So what’s the bad news? Twitter had zero growth in monthly active users in Q4 and saw its global audience shrink, signaling to investors that its best years are behind it, and aging gracefully does not seem to be in the cards (short of an algo revolution)

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OTHER STORIES

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ECONOMIC CALENDAR

DIVERSITY = PROFITABILITY

Most would agree that workplace diversity is a positive thing. Bonus: it’s also profitable—a study of 22,000 publically traded companies in 91 countries found that when 30% of top management positions are held by women, profitability rises by 15% versus those with 0%. Here are the rest of the stats:

  • Nearly 60% of companies had no female board members, and over 50% didn’t have any female executives. Only 5% had a female CEO—though the study also found that there was no difference in performance between male and female CEOs.
  • On the plus side, another survey from 2014 found that Americans see women as equally capable of leadership positions, political or corporate.
  • Currently, Norway is the most gender diverse: women hold 40% of board seats and 20% of executive positions. Compare this to Japan, where only 2% of women hold board seats. The U.S. is in between, with 12% of board positions held by women.

INTERVIEW QUESTION OF THE DAY

Four investment bankers need to cross a bridge at night to get to a meeting. They have only one flashlight and 17 minutes to get there. The bridge must be crossed with the flashlight and can only support two bankers at a time. The analyst can cross in one minute, the associate can cross in two minutes, the VP can cross in five minutes and the MD takes 10 minutes to cross. How can they all make it to the meeting in time? (Answer)

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BUSINESS TERM OF THE DAY

Paid Syndication — Web syndication is the promotion or inclusion of content on a third party website. Paid syndication is simply web syndication where the brand pays for its content to be published. A brand will pay for syndication in order to drive more traffic to its site, for exposure to a new audience or for brand promotion.

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FOOD FOR THOUGHT
$100 billion: did you know that as smartphones are becoming cheaper and cheaper, the worldwide smartphone application market is set to surpass $100 billion in total revenues in five years?


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