Key Market Moves: Meta, Pinterest, Alphabet

Major US indices tumbled yesterday (3 February), dragged down by losses within the tech sector after Facebook owner Meta Platforms posted disappointing earnings on Wednesday. 

Given Meta’s hefty valuation, big swings in its stock price can lift or sink broader indices. The S&P 500 and tech-focused Nasdaq Composite broke their four-day rally, dropping 2.4% and 3.7% respectively yesterday. The Dow Jones Industrial Average, which does not include Meta, fell 1.5%.

Despite Thursday’s decline, Wall Street’s major indices are still on track for weekly gains. Strong earnings from companies such as Apple and Alphabet have buoyed market sentiment after a volatile trading month in January

Meta’s poor results

Shares in Meta have plummeted 26.4% so far after the company reported its first decline in daily active users and blamed increased competition from rivals such as TikTok. The plunge has since wiped more than $230 billion of its valuation.

The company forecasted Q1 2022 revenue below analysts’ expectations on the back of Apple’s recent privacy changes. Meta also reported a drop in fourth quarter profits after its significant investments in the metaverse sharply increased expenses.

Amazon’s after-hours surge

Amazon’s share price rallied by more than 15% in after-hours trading on Thursday after the company announced a price hike for its Amazon Prime membership. Prices will be raised by 17%, partly due to rising “wages and transportation costs” in its logistics network.

Overall, investors seem to be welcoming this move. Revenue from Amazon Prime memberships in the fourth quarter of 2021 was $8.1 billion, a 15% year-on-year increase.

Snap and Pinterest bounce back 

Shares of social network operators Pinterest and Snap dropped on Wednesday as investors spooked by Meta’s fourth-quarter earnings exited their positions. 

But their share prices rebounded on Thursday after posting better-than-expected fourth quarter results. Pinterest stock rose over 28% in extended trading as it reported 20% year-on-year revenue growth for Q4 2021.

Snap rallied more than 50% after the company posted its first quarterly profit of $23 million, indicating that they are adjusting better to Apple’s privacy policy changes than expected.

Alphabet’s blockbuster earnings

Alphabet’s outstanding performance was a bright spot in this week’s earnings calendar. The company reported fourth-quarter revenue of $75 billion, beating analyst estimates of $72 billion. The robust earnings report led at least nine Wall Street firms to raise their price target on the stock.

As part of its earnings announcement, Alphabet also announced a 20:1 stock split for all three classes of its stock. This could potentially boost its share price; Apple and Tesla saw share price gains in the following weeks after announcing their own stock splits.

Alphabet was the top-performing Big Tech company in 2021 after registering a 65% gain last year.

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