Earnings releases, gas prices fall, and Tesla "recalls" some of its vehicles. Newsletter #11
Earnings releases, gas prices fall, and Tesla "recalls" some of its vehicles. Newsletter #11
Palantir, Shopify, and Airbnb report earnings
European Gas prices tumble
Tesla “recalls” some of its vehicles
FBI hacked
Palantir, Shopify, and Airbnb Earnings
Palantir
Palantir (PLTR) had its first profitable quarter in Q4 of 2022 whilst suggesting that full-year 2023 would also be profitable. Its earnings report showed a net income of $31 million in the quarter and total revenue grew 18% year over year to $509 million. Revenue for 2022 as a whole was up 24% to $1.91 billion.
Speaking about the quarter, CEO Alex Karp, said “This is a significant moment for us and our supporters.”
In his annual letter, he went on to say:
“Our commitment to and relentless focus on the long term at times has required patience. At other times, as our profitability demonstrates, we will deliver results at a rate that surpasses even the expectations of those who believed that we would prevail. A threshold has been crossed, and this is the start of our next chapter.”
The stock now sits at $9.40, way off its $35.11 peak but long-term holders of will be more than pleased with the business’s underlying performance in 2022.
Shopify
Shopify’s Q4 earnings were good too, but their outlook for Q1 of 2023 was less than stellar.
Fourth quarter revenue was up 28% to $1.7 billion, and it reported earnings of $0.07 per share vs the $0.01 loss expected by analysts.
Unfortunately, its outlook for Q1 2023 wasn’t as good as many had hoped, and shares plunged 15.9% on Thursday. They’re expecting revenue growth of “high-teen percentages” - analysts had projected over 20%.
Thankfully, their pricing plan increase will come into effect in April so after the first quarter, things will hopefully start to look up for the company. It’s difficult for merchants to leave the company as they’re already “locked-in” to the ecosystem and there aren’t many great alternatives out there.
Cathie Wood certainly seems to think things will pick up. Her ARK Investment company bought about $35 million of Shopify shares after the drop and sold stock in chip-making company Nvidia.
Airbnb
Airbnb had its most profitable quarter ever. Its earnings report showed revenue of $1.9 billion, 24% growth year over year, and a profit of $319 million. And revenue of $8.4 billion, 40% growth year over year, and a profit of $1.9 billion for the whole of 2022.
At the end of last year they had 6.6 million global listings, 900,000 more than at the start of the year, excluding China. They also said they’re seeing strong demand for rooms in the first quarter of 2023.
They also said that they have three main focuses for 2023:
Make hosting mainstream by making it easier to get started and providing better tools for hosts
Perfect the core service and improve the user experience for both hosts and guests via customer feedback
Expand beyond the core services and build the foundation for future products to help Airbnb grow in the coming years.
Airbnb was hit hard by the pandemic, but it seems to be rebounding strongly. The company said that demand this year remained strong, and both the number of rental properties on the platform and demand for them grew last year.
Speaking about the outlook for Q1 2023 the company said:
”We’re excited to see the continued strong demand in Q1 2023. We’re particularly encouraged by European guests booking their summer travel earlier this year, the market share gains we are seeing in Latin America, as well as the continued recovery within Asia Pacific.”
European Gas Prices Tumble
Gas prices in Europe have fallen to their lowest level in almost 18 months, suggesting that the continent will avoid the much feared energy crisis that was being talked about this time last year when the Ukraine conflict first began.
The falling prices will reduce the risks of a European recession further and put a further dent in the Russian economy and Vladimir Putin’s war effort. Prices are down 85% from their highs in August.
Prices have been pushed down by an unusually mild winter and the EU’s efforts to wean itself off Russian gas as a way to hurt its war effort. Gas consumption reportedly remains 20% below average levels and analysts it would take a combination of very unlikely scenarios for them to g back to normal anytime soon.
European weather in March is also forecast to be relatively mild which will further reduce demand for gas.
It’s already seemed for a while that Putin’s invasion of Ukraine isn’t going to plan and this will further dent the Russian war effort. The outcome of the war and how much longer it will go on for remains uncertain, but it seems to be going more and more in Ukraine’s favor.
Tesla “Recalls” Some of its Vehicles
The recall applies to roughly 360,000 vehicles and comes after US safety officials raised concerns that its self-driving capabilities could allow drivers to exceed speed limits or travel through intersections unsafely.
Although technically a recall, the changes to the vehicles will happen via an over the air update in the coming weeks; owners won’t actually have to do anything.
Tesla says it’s not aware of any deaths or injuries from what the National Highway Traffic Safety Administration sees as flaws in its software. Tesla also disputes this claim but decided to issue a recall "out of an abundance of caution".
CEO Elon Musk tweeted that using the word “recall” for a software update requiring no effort on the owner’s behalf is “anachronistic and just flat wrong!”
The affected vehicles include the following years and models equipped with or pending installation of the full self-driving beta software:
2016-2023 Model S and Model X
2017-2023 Model 3
2020-2023 Model Y
FBI Hacked
The FBI is investigating an attack on its network. It says it’s already contained the attack and is now working to uncover just how deep it went and how it might impact the organization.
The attack reportedly involved computer systems being used to investigate child exploitation in the FBI’s New York office. The Bureau hasn’t released much information about the attack other than saying it’s contained.
Whether this will affect the share price of the big cybersecurity companies such as Palo Alto Networks (PANW) or Crowdstrike (CRWD) is yet to be seen, we’ll find out later today when the markets open!