Earnings Season Gives a Look Beyond Market Tumult

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On Thursday, the froth in markets continued to eke down like the deflating foam in a root beer float. The Nasdaq fell to its lowest since June and the small-cap Russell 2000 entered official bear market territory by dropping 20% from its peak. But markets are markets, they will go up and they will go down day by day,

An Apple a Day Keeps Supply Chain Problems Away

Apple cautioned investors in recent months that supply chain woes and resulting parts shortages would impact its business. The company went ahead and posted its best-ever fourth-quarter results anyway. Despite the supply chain slowdown, the Silicon Valley tech giant banked a record $34.6 billion profit in the quarter, 10% better than analyst estimates. IPhone revenue — which is heavily dependent on parts — was $71.6 billion, up 9% from a year ago, and way out in front of $67.74 billion analysts estimates.

What’s Next: CEO Tim Cook hinted that Apple will soon be even better positioned than the record-breaking quarter, telling the Wall Street Journal, “We’re forecasting that we will be less constrained in March.”

McDonald’s Showed Labor and Inflation Burdens Aren’t Going Anywhere
McDonald’s on Thursday announced that it’s doing what it’s supposed to do: selling burgers. Same-store sales at the fast-food chain rose 12.3% in the fourth quarter, better than the 10.5% increase Wall Street expected. But a $1.6 billion profit that amounted to $2.23 per share fell 11 cents short of Wall Street expectations. The weight of inflation and the labor crunch is what did it: operating costs and expenses rose by 14% in the quarter, as food ingredients and staffing got significantly pricier.

What’s Next: Costs will weigh even more. This year, McDonald’s is forecasting US food and paper costs will rise by high single or low double digits (they rose just 4% last year).

Robinhood Hinted Its Meme Stock Glory Days Might Be Over
Robinhood, the trading app that was the epicenter of last year’s wild WallStreetBets saga that shorted several hedge funds into near oblivion, gave a bleak outlook for itself Thursday. The company announced it lost $3.69 billion last year and said its first-quarter revenue in 2022 will likely be below $340 million, a 35% drop from last year. Meanwhile, its monthly active users have fallen to 17.3 million from 18.9 million three months ago. Shares in the company tanked 15%.

What’s Next: Robinhood could be bought by the rich — it’s widely considered a takeover target, with shares down over 80% from their peak.