Welcome To Q3 Earnings Season
And so it begins.
Hello there fellow reader and welcome back to the quarterly earnings newsletter. The earnings season is about to begin so this will be a short and sweet little intro with some market news.
PPI & CPI
The producer price index for final demand climbed 0.4% from August (vs expected 0.2%), the first increase in 3 months, and was up 8.5% from a year ago (vs. expected 8.4%).
Excluding food and energy components, core PPI increased 0.3% in Sept and increased 7.2% YOY.
Prices paid to US producers rose in September more than expected, suggesting inflationary pressures will take time to moderate and keep the FED on its aggressive interest rate-hike path (bad for stocks).
The CPI report came in a bit hotter than expected (bad for stocks), so the FED will probably continue its aggressive rate hikes.
• CPI MoM: 0.4%
→ vs 0.2% Expected
• CPI Ex Food & Energy MoM: 0.6%
→ vs 0.4% Expected
• CPI YoY: 8.2%
→ vs 8.1% Expected
• CPI Ex Food & Energy YoY: 6.6%
→ vs 6.5% Expected
It seems like there’s more pressure on JP to chill out with the hikes in order to prevent further wealth destruction.
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Taiwan Semiconductor Manufacturing Company
Revenue $20.2B (+36% Y/Y)
Gross margin 60% (+9pp Y/Y)
Operating margin 51% (+9pp Y/Y)
Profit grew by 80% YOY
Q4 FY22 Revenue Guidance ~$20.3B
Meta Connect Event 2022
I highly suggest you watch the META Connect event before making assumptions.
Here are some key points.
The Walking Dead game on Quest made over $50M in revenue already.
1 in 3 apps on Quest made over $1M in revenue.
33 apps made over $10M gross revenue, up from 22 earlier this year.
Apps making over $5M doubled since last year.
Meta Quest Pro will cost $1499 and it Ships on Oct 25. (not for the average Joe).
Partnership with Microsoft (everybody loves Raymond... I mean Satya)
Microsoft Teams coming to Meta Quest.
And so are Microsoft 365, Windows, and of course Xbox Cloud Gaming.
Quest for Business
Accenture x Meta x Microsoft
FYI, Accenture purchased 60,000 Quest 2 headsets for its workforce.
Netflix Ads Are Coming
I’ve covered everything you need to know on my YouTube channel here.
JPMorgan Chase reported third-quarter net income of $9.7 billion, or $3.12 a share, a decline of 17% from a year earlier, while revenue for the quarter rose 10% to $32.7 billion.
Wall Street analysts polled by FactSet expected the bank to earn $2.90 a share on revenue of $32.12 billion.
JPMorgan said earnings were pushed lower due to a net credit reserve build of $808 million compared with a net reserve release of $2.1 billion in the prior year. But profits were helped by higher interest rates, which boosted its net interest income by 34% to $17.6 billion.
Citigroup Inc. reported net income for the third quarter of $3.5 billion, or $1.63 per share, down 25% from $4.6 billion, or $2.15 per share, a year ago. The decline was driven by higher cost of credit resulting from loan growth in its personal banking and wealth management division and higher operating expenses.
Third-quarter revenue grew 6% to $18.5 billion from $17.4 billion in last year’s quarter primarily due to the gain on sale of the bank’s Philippines consumer business versus a loss on sale of its Australia consumer business in the prior-year period.
Citi’s results exceeded Refinitiv analysts, who were expecting earnings of $1.42 per share on revenue of $18.25 billion, according to CNBC.
“Given the strength of our balance sheet, capital levels, and liquidity, we are well positioned to help our clients navigate very challenging markets and slower growth,” Citi CEO Jane Fraser said in a statement.
Morgan Stanley reported third-quarter net income of $2.63 billion, or $1.47 per share, a 29% drop from the same period a year ago.
Revenue fell 12% to $13 billion for the third quarter, compared with $14.8 billion a year ago, dragged down by a 55% decline in investment banking revenue, including fees from mergers and acquisitions.
The bank’s results missed analysts’ forecasts of about $1.49 per share in earnings on revenue of $13.3 billion, according to CNBC.
“Firm performance was resilient and balanced in an uncertain and difficult environment, delivering a 15% return on tangible common equity,” CEO James Gorman said in a statement.
See you all next week!