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Chart of the Week

Earnings Scoreboard: A Turbulent Week in Tech [Chart]

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Earnings Scoreboard: A Turbulent Week in Tech [Chart]

Earnings Scoreboard: A Turbulent Week in Tech [Chart]

Amazon and Facebook soar, while Apple, Netflix, and Google whiff

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

For many blue chip companies, earnings season can end up being relatively dry.

For example, yesterday MasterCard reported an earnings “beat” of $0.86 earnings per share (EPS) compared to the $0.85 consensus. The stock inched up 0.7% in afternoon trading and now it’s back down today. In other words, it’s business as usual again.

However, for the world’s technology giants, earnings season can make or break a stock. The reason for this is simple: investors buy technology companies such as Amazon or Netflix for their future growth prospects, rather than their current profitability. In theory, these companies should have an incredible ability to scale, and the market prices this in to make these stocks more expensive.

If a company shows signs that it is growing slower than expected, investors punish the stock with the expectation of a ripple effect on future cash flows.

The Tech Scoreboard

The last week has been particularly eventful on the tech earnings front, and Jim Cramer’s “FANG” stocks were the center of the action. After buoying the market for much of 2015, the stocks went their separate directions.

Netflix kicked it off with a huge whiff. While revenues and EPS were on track for the quarter, its guidance on subscriber growth was the ringing of a big alarm bell. Wall Street was looking for the company to add 3.5 million international subscribers in Q2, but Netflix said it would only be adding two million. The stock has tanked spectacularly ever since, losing -18.3% in value.

Alphabet and Apple, the two most valuable public companies in the world by market capitalization, also showed signs of a struggle. Both stocks are now down close to -10% from pre-earnings, shedding a combined $100 billion in value. Apple posted its first year-over-year decline in quarterly revenue since 2003, while Google’s parent company fell short on both top and bottom lines. Co-founders Sergey Brin and Larry Page have lost a combined $3.8 billion in wealth since the report.

While this is all very dire for the tech sector, Jeff Bezos and Mark Zuckerberg came to the rescue.

Yesterday, Amazon killed it for the quarter, bringing in an extra $1.1 billion of revenue above Street estimates. The company reported its largest quarterly profit, and analysts are now ecstatic about the company’s blowout quarter. The stock is up close to 10% today.

Facebook also helped save face for Silicon Valley, and shares have now hit an all-time high as the company beat projected revenues and earnings.

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Chart of the Week

The 10 Breakthrough Technologies That Will Define 2019

Which innovations will dominate headlines in 2019? According to Bill Gates, watch for these 10 breakthrough technologies to change the world.

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The 10 Breakthrough Technologies That Will Define 2019

Gone are the days of turning stones into spears. With the advent of new technologies, we’ve learned to develop tools that not only make living faster and easier every day, but also improve the future of humanity as a whole.

Today’s Chart of the Week draws from the MIT Technology Review, which features Bill Gates’ predictions for the top 10 breakthrough inventions that will capture headlines in 2019.

Top 10 Breakthrough Technologies

1. Gut Probe in a Pill
These swallowable devices can detect and potentially prevent diseases that cause malnutrition and stunted growth in millions of children worldwide.

2. Custom Cancer Vaccines
Personalized cancer vaccines, targeting only the cancerous cells and leave healthy cells alone, could help ensure faster recovery times and pose fewer risks to patients.

3. Meat-free Burgers
Plant-based and lab-grown food products will ideally alleviate the environmental impact of the livestock industry.

4. Smooth-talking AI assistants
The AI assistants of the future will have even more human-like conversations to personally engage customers. Companies would see measurable benefits, with just one breakthrough here garnering a 5% jump in productivity.

5. Sanitation without sewers
Improperly drained sewage causes death in one out of every nine children. Sanitation that doesn’t require sewers would not only prevent exposure diseases but also help turn waste into useful products like fertilizer.

6. ECG on your wrist
While most medical ECGS have up to 12 nodes to detect abnormalities, today’s wearables typically have only one. An ECG on the wrist would help reduce the risk of heart disease by monitoring changes and patterns in daily life.

7. Robot Dexterity
Advancements in robotics will enable the natural dexterity required to complete a greater range of tasks, such as helping an ailing loved one out of bed, doing the laundry, or building toys.

8. Predicting Preemies
Premature births are the leading cause of death for children under five years old. Tests to detect the possibility of a premature birth could be available in doctors’ offices in as little as five years.

9. Carbon Dioxide Catcher
Carbon dioxide catchers filter out CO₂ from the air and capture it for other uses. These include synthetic fuel creation, CO₂ for soft drinks, and plant growth in greenhouses.

10. New-wave Nuclear Power
Traditional nuclear reactors produce ~1,000 megawatts (MW), while these proposed mini-reactors would produce tens of megawatts ─ making them safer, more stable, and more financially viable for potential users.

A Vision for a Better Future

The biggest takeaway?

Seven of the 10 breakthrough technologies stem from the healthtech sector.

While several inventions on this list are years away from becoming a reality, they continue to embody the vision and passion that humans share to create and explore.

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Chart of the Week

How the Modern Consumer is Different

We all have a stereotypical image of the average consumer – but is it an accurate one? Meet the modern consumer, and what it means for business.

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How the Modern Consumer is Different

How the Modern Consumer is Different

There is a prevailing wisdom that says the stereotypical American consumer can be defined by certain characteristics.

Based on what popular culture tells us, as well as years of experiences and data, we all have an idea of what the average consumer might look for in a house, car, restaurant, or shopping center.

But as circumstances change, so do consumer tastes – and according to a recent report by Deloitte, the modern consumer is becoming increasingly distinct from those of years past. For us to truly understand how these changes will affect the marketplace and our investments, we need to rethink and update our image of the modern consumer.

A Changing Consumer Base

In their analysis, Deloitte leans heavily on big picture demographic and economic factors to help in summarizing the three major ways in which consumers are changing.

Here are three ways the new consumer is different than in years past:

1. Increasingly Diverse
In terms of ethnicity, the Baby Boomers are 75% white, while the Millennial generation is 56% white. This diversity also transfers to other areas as well, such as sexual and gender identities.

Not surprisingly, future generations are expected to be even more heterogeneous – Gen Z, for example, identifies as being 49% non-white.

2. Under Greater Financial Pressure
Today’s consumers are more educated than ever before, but it’s come at a stiff price. In fact, the cost of education has increased by 65% between 2007 and 2017, and this has translated to a record-setting $1.5 trillion in student loans on the books.

Other costs have mounted as well, leaving the bottom 80% of consumers with effectively no increase in discretionary income over the last decade. To make matters worse, if you single out just the bottom 40% of earners, they actually have less discretionary income to spend than they did back in 2007.

3. Delaying Key Life Milestones
Getting married, having children, and buying a house all have one major thing in common: they can be expensive.

The average person under 35 years old has a 34% lower net worth than they would have had in the 1990s, making it harder to tackle typical adult milestones. In fact, the average couple today is marrying eight years later than they did in 1965, while the U.S. birthrate is at its lowest point in three decades. Meanwhile, homeownership for those aged 24-32 has dropped by 9% since 2005.

A New Landscape for Business?

The modern consumer base is more diverse, but also must deal with increased financial pressures and a delayed start in achieving traditional milestones of adulthood. These demographic and economic factors ultimately have a ripple effect down to businesses and investors.

How do these big picture changes impact your business or investments?

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