As strong as they were, the quarterly results from tech giants, Tesla, facebook and Apple will not be enough to reverse the growing instability on Wall Street that has seen small investors send stock prices in isolated companies soaring and forcing hedge funds to unload hundreds of millions of dollars of share to staunch the losses.
The growing speculation and volatility saw the Dow fall 2.0%, the S&P 500 lose 2.57% and the Nasdaq shed 2.61% on Wednesday.
But it wasn’t just the US where losses were taken. MSCI’s global equity markets index fell 2.04% to 652.5, while its index for emerging markets stocks fell 1.25%. The pan-European STOXX 600 index lost 1.16% after the german government cut its economic forecasts for the rest of 2021.
Wall Street added to earlier losses after the Federal Reserve left its key rate near zero and made no change to its monthly $US120 billion of bond purchases, while warning of a potential slowdown in the pace of the economic recovery because of the continuing spread of COVID-19.
The volatile share dealing brought a statement from market regulator, the Securities and Exchange Commission that it is closely monitoring the activity and hints from the White House of moves to control the activity.
Both those stories emerged after trading had finished on Wednesday and while the likes of Apple, Facebook and Tesla were reporting.
Apple sales topped $US100 billion in a quarter for the first time in the three months to December 26 as the iPhone giant topped its own and market forecasts.
Helping boost revenues was a 57% surge in sales in China to $US21.31 billion, compared with $US13.58 billion a year earlier.
Thanks to surging sales of new iPhones total revenue was $US111.4 billion, up 21% from the final quarter of 2019.
International sales accounted for a record 64% of the total. Analysts had expected revenue of $US103.3 billion.
Revenue from the iPhone line, which was refreshed with the 12 series family of devices in October (a few weeks later than normal), was a record $65.6 billion, far better than the $US59.8 billion expected by analysts and topping the previous peak of jus over $US61.5 billion in the December quarter of 2018.
Mac sales topped $US8.68 billion, in line with analyst forecasts of $8.69 billion and $US7.16 billion a year ago. Sales of iPads were $US8.44 billion compared with forecasts of $US7.46 billion and well ahead of the 5.977 billion in the december, 2019 quarter.
While Apple has been pushing its Services division for the past year to 18 months and making revenue and earnings gain, the December quarter saw its core products of phones, Macs, Ipads deliver the most meaningful results.
Still the services business (which includes its new Apple One bundle of television, music and cloud storage service) reported revenues of $US15.76 billion, compared with analyst estimates of $US14.80 billion and $US12,75 billion in the final quarter of 2019.
In the earnings release, CEO Tim Cook called the holiday season “historic” and said Apple is committed to exploring “how we can help the communities we’re a part of build back strongly and equitably.”
Cook told Reuters in an interview that the company now has an active installed base of 1.65 billion devices, compared with 1.5 billion devices a year ago.
Cook also said Apple now has an installed base of more than 1 billion iPhones, an increase over the 900 million the company most recently disclosed in 2019.
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Facebook lifted net profit for the December quarter 53% and for 2020 as a whole by an equally impressive 58% as it shook off attempted consumer boycotts, growing attacks from politicians and others in the US and elsewhere.
Like so many other tech giants, Facebook’s financial results took a huge positive boost from the COVID pandemic and lockdowns.
It has also benefitted from the US elections in the final quarter and the rise in lies and mistruths, especially from Donald Trump and many Republicans, while it has also benefited from the surge in misleading commentary on COVID and vaccines.
That was reflected in its ad revenues for the 4th quarter – up 31% against 21% for the year as a whole.
Ad revenues for the year totalled more than $US84.16 billion after they surged 31% in the December quarter to $US27.187 billion.
The company said 4th quarter earnings totalled $US11.219 billion, up sharply from the $US7.349 billion earned in the 4th quarter of 2019.
For the year earnings totalled $US29.146 billion against $US18.485 billion for 2019.
Facebook said in the 4th quarter and 2020 results that it lifted revenue 33% to $US28.07 billion in the 4th quarter – better than the $US26.44 billion forecast by the market.
For the year as a whole revenue rose 22% to nearly $US86 billion.
Facebook said its daily active users totalled 1.84 billion up 11% over the year while monthly active users rose 12% to 2.8 billion.
Investors will like the news in the Facebook statement of a sharp boost to its current buyback.
The social media giant said its board had authorised incremental share repurchases of up to an additional $US25 billion of Class A common stock.
The company said this was in addition to the previously authorised repurchases of up to $34 billion of Class A common stock.
As of the end of 2020, $US8.6 billion remained on the previous share repurchase plan.
The extension of the share buyback could be explained by the warning from directors that the company saw “cross currents” ahead in 2021.
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Tesla saw a small rise in revenue for the quarter to $US10.74 billion vs $10.4 billion expected
Tesla previously said it had delivered 499,550 vehicles last year just short of its guidance for half a million vehicle deliveries in 2020. (Deliveries are the closest approximation of sales numbers disclosed by Tesla.) It produced 509,737 vehicles during the year.
Since Tesla’s third quarter earnings call last October, the price of the company’s stock has more than doubled, giving it a market value of more than $US830 billion, making it the fifth-most valuable company in the US.
Tesla’s results were nowhere near as convincing as those from Apple and Facebook.
But it did report earnings for the year as a whole of $US721 million, its first full year of making profits.
