🍏 Apple breaks $110 billion record

Good morning Investor! “As a guiding principle, life shrinks and life expands in direct proportion to your willingness to assume risk.”

— Casey Neistat

MARKET UPDATE

Shares of Peloton (PTON) crashed over 12% after the company announced layoffs for 15% of its workforce and its CEO stepping down. Wayfair (W) on the other hand, rallied by 11% after reporting a dramatic drop in its losses.

TODAY’S BIG HEADLINES

• Apple breaks $110 billion record

• Zoetis’ pet products crush expectations

• Monster Energy suffers currency headwinds

• Weight loss drugs are the new Gold

EARNINGS RESULTS

Apple breaks $110 billion record🍏

Money in the Bank: The tech titan Apple (AAPL) sent shockwaves through the market on Thursday evening, like a superhero landing in the middle of a quiet suburb. They not only posted a double beat, but also announced the largest ever share buyback program, sending shares through the roof in after-hours trading, painting the company as a golden apple at the top of the metaphorical tree that is the stock market.

Buybacks Are King: Apple marginally beat expectations by reporting revenue of $90.8 billion, down 4% YoY and earnings per share of $1.53, up % YoY. The big plot twist, however, was the announcement of a colossal $110 billion share repurchase program as well as a dividend increase to $0.25 per share from the previous $0.24. That wallet of theirs must be packed to the brim!

Draw the Curtains: While overall revenue declined 4%, this isn’t the full story as much of this drop is due to iPhone sales. It’s like they’ve dropped the apple, but it’s still good to eat. Product revenue dropped 10% down to $66.9 billion, while services revenue, which is a significantly higher margin business, grew 14% to $23.9 billion. The most surprising of the bunch was actually the beat on Mac revenue, with it coming in at $7.5 billion, significantly higher than the $6.86 expected. That new M3 chip must have Mac users far and wide buzzing with excitement.

The China Problem: As it turns out, Chinese demand isn’t as much of a problem as the market had been fearing leading into earnings. Sales in the Chinese market were still down 8%, coming in at $16.37 billion but this figure is significantly higher than the consensus estimate among analysts of $15.25 billion. The key caveat? CEO Tim Cook actually revealed that iPhone sales grew in China, despite all of the fears about the device losing market share to competitor Huawei. They say an apple a day keeps the doctor away, but in China, it’s an Apple iPhone a day keeps boredom at bay!

Wall Street Whispers: Shares of the smartphone maker surged over 7% in after-hours trading. This rally now sends the stock into positive territory for the year thus far. Reminds me of the plot for almost every Pirates of the Caribbean film.

EARNINGS RESULTS

Zoetis’ pet products crush expectations🐶

Underdog: Depsite Zoetis’ (ZTS) recent woes regarding the rise of pet deaths, which many are correlating with their pet painkillers, Zoetis reported quarterly earnings that smashed expectations like a dog with a new chew toy. Thanks to strong, resilient demand for its products, the company has increased its forward-looking guidance for 2024.

Earnings Unleashed: Zoetis managed to beat earnings estimates for both sales and profits, with the pet drugmaker reporting the following:

• Revenue of $2.2 billion, up 10% YoY. Analysts had been expecting $2.15 billion, leaving them wagging their tails.

• Net income of $599 million, up 9% YoY.

• Adjusted diluted EPS of $1.38, up 10% YoY which had analysts purring with delight as this beat expectations of $1.35 per share.

The Nitty-Gritty: The cause of this beat was Zoetis' companion animal business where revenue grew 18% to reach $1.45 billion for the quarter, well above analysts' expectations of $1.37 billion. Livestock sales didn’t fare quite as well, with sales slipping 5% down to $720 million, below consensus estimates of $780 million. It seems the cows aren’t coming home just yet.

Increased Outlook: Zoetis have also provided us with an increased forecast for fiscal year 2024, expecting revenue of between $9.05-9.2 Billion, adjusted diluted earnings per share of $5.71-5.81, and growth in its adjusted net income of between 13-15%. Or in other words, a future full of treats and belly rubs.

Wall Street Whispers: Shares of Zoetis shot up like a greyhound out of the gate, rallying by over 6% when the market opened. The pet drugmaker’s stock is still unfortunately down over 14% year-to-date, like a dog with its tail between its legs.

EARNINGS RESULTS

Monster Energy suffers currency headwinds👹

Monster Under the Bed: The beloved caffeine behemoth Monster Beverage (MNST) reported earnings after the market closed on Thursday, sending shares surging in after-hours. Revenue was in-line with expectations while earnings per share missed by two cents. Luckily, the price target cut earlier today by Stifel Nicolaus hasn’t hindered the good sentiment.

The Juice: cracked open a new one and reported revenue for the quarter of $1.9 billion and earnings per share of $0.42. These are up 11.8% and 12% respectively, like a caffeinated kangaroo on a trampoline. It’s also important to note that when adjusted for adverse changes in FX, net sales actually grew 15.6%, due to the impact of Argentina, the land of the Tango.

Creating Shareholder Value: Gross profit as a percentage of net sales also rose to 54.1%, increasing from 52.8% and the company also announced their intention to do their best impersonation on Apple and to commence a tender offer to repurchase as much as $3 billion worth of their own stock. Margin expansion and share buybacks are two massive drivers of share price performance.

The Back of the Can: International sales as a percentage of total sales increased from 37% to 39% thanks to an increase of 19.5% to $744.1 million. Talk about loved by all! The company also launched an affordable energy brand in the Philippines during the quarter named named Predator Energy as well as a new non-carbonated product in China which has achieved positive results, unlike the aforementioned Apple. The company’s affordable energy brands Predator and Fury as well as various energy drink brands acquired from The Coca-Cola Company are grouped together into the Strategic Brands segment which saw sales hit $108.4 million and increase of 25.6%. Note, this figure is up 36.9% when excluding foreign currency impacts. Those pesky Pesos.

Bit of a Kick: Monster’s alcohol-infused beverage lines including The Beast Unleashed, Nasty Beast Hard Tea, as well as various craft beers and hard seltzers saw superb growth, with sales rising 21.1% to $56.1 million. It turns out that alcohol could be the missing ingredient.

Wall Street Whispers: Shares of the energy drink company rose over 4% in after-hours trading. Despite the company’s excellent growth, the stock is still down over 8% over the past twelve months. The company’s fortunes will likely turn around once the US dollar stabilises against its international peers. It feels like we’re waiting for another season of a blockbuster tv show.

EARNINGS RESULTS

Weight loss drugs are the new Gold🥵

Demand Goes Through the Roof: Following in the footsteps of competitor Eli Lilly (LLY), Novo Nordisk (NVO) has reported dramatic levels of demand for its weightloss and diabetic drugs Wegovy and Ozempic. This led to the largest European company by market cap raising its full year guidance. As a result, the drugmaker reported a double beat on both the top and bottom line for the quarter. Despite this, the stock has traded down due to “underlying growth being a bit weaker than expected”.

Novo’s earnings results for the quarter were as follows:

• Revenue of 65.3 billion Danish kroner ($9.4 billion), up 22% YoY

• Net income of 25.4 billion Danish kroner ($3.65 billion), up 28% YoY

• Diluted EPS of 5.68 Danish kroner ($0.82), a 29% increase YoY

• Roughly 27,000 new patients in the US are taking a weekly injection of their weightloss drug, a roughly five-fold increase since December.

• Wegovy launched in Spain on Wednesday and intends to launch in Canada on May 6th, further expanding its global reach.

The Ugly: Novo Nordisk is facing a similar problem to its largest competitor Eli Lilly, which is the inability to meet demand. As a result, the company is spending billions on ramping up the production of its drugs. It’s like they’re trying to fill a bathtub with a teaspoon. Additionally, due to increased competition from Eli Lilly’s Zepbound, the price of Wegovy has actually come down, although the exact amount it’s come down is unclear. It’s like a game of financial limbo.

Fortune Cookie: Management have provided guidance for the full fiscal year, forecasting sales growth in the range of 19-27%, operating profit growth in the range of 22-30%. Both of which are higher than previously forecasted, indicating even further positive sentiment from management. It’s like they’ve found a fortune cookie with a very promising message inside.

Wall Street Whispers: Shares of Novo Nordisk sold off close to 3% in pre-market trading and continued to slide throughout the day. Since the launch in the US of its sensational weight loss drug Wegovy, the stock is up over 260%! Fun fact, Novo Nordisk’s market capitalization is now greater than the Danish economy. Talk about outgrowing your hometown!

MORE NEWS

Additional market-moving events🌎

• AI Joins the App Store: Amazon-backed AI firm Anthropic, have launched an iPhone app for its chatbot, Claude. (The Verge)

• Colossal Settlements: Johnson & Johnson have proposed paying a settlement of $6.5 billion in an effort to resolve its talc powder lawsuits. (The Guardian)

• Layoffs Continue: Tesla CEO Elon Musk has taken a rather surprising course of action by laying off the entire 500-person team responsible for the Tesla charging network. (CNN)

• LinkedIn Launches Games: Yes, that’s correct, LinkedIn has followed suit and launched three games. These are Queens, Crossclimb and Pinpoint. (TechCrunch)

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