Predicting the next big thing has been notoriously hard. Nobody doubts that the Metaverse has its uses, but Mark Zuckerberg believes in it so much he has bet Facebook’s future on it to the point of renaming his company Meta (MVRS) – Get Meta Report.
That would be like if Amazon (AMZN) – Get Amazon.com, Inc. Report, which filed for a number of 3D printing patents, had ditched its name and become 3DP.
The metaverse has caught the attention of every company ranging from Microsoft (MSFT) – Get Microsoft Corporation Report to Nike (NKE) – Get NIKE, Inc. Class B Report, and the race is on for which company will reign in the virtual space. It’s not just a buzzword anymore — it’s a movement.
But, Zuckerberg might be wrong, and one prominent CEO thinks he is, putting the brakes on the metaverse enthusiasm during a recent television appearance.
Expedia (EXPE) – Get Expedia Group, Inc. Report CEO Peter Kern thinks that people will actually remain more interested in the real world and he said as much Friday on CNBC.
“I don’t see [the metaverse] as a competitive threat. We’re certainly, like everyone else in the world, sort of intrigued by it … but we’re pretty much about the ‘real-verse,’” Kern said in a “Squawk on the Street” interview.
The CEO drove that point home and said that he did not expect virtual experiences to replace real experiences.
However, Zuckerberg believes that we’re “at the next chapter for the internet and he laid out what he thinks will happen next in a letter that was released at the time Facebook took on the Meta name.
Big Tech Could Become Big Players in Online Advertising… Like Everything Else
Big Tech benefits from a surge in the need for online advertising by businesses following the covid-19 pandemic.
Companies like the aforementioned Alphabet (GOOGL) – Get Alphabet Inc. Class A Report, Microsoft, Amazon (AMZN) – Get Amazon.com, Inc. Report, and even Apple (AAPL) – Get Apple Inc. Report have each developed winning digital advertising platforms that are contributing nicely to their top-line growth in recent quarters.
$209.5 billion. That’s the total amount of revenue Alphabet generated in 2021 from Google advertising, up 42.5% year-over-year. This staggering figure is a reminder of just how strong the digital advertising industry has become in wake of the pandemic and could also point to an improving economy.
And, social media giant Meta’s stock has plummeted in recent sessions following a concerning earnings report in which CEO Mark Zuckerberg mentioned that new privacy features introduced by Apple could result in $10 billion in lost sales in 2022.
Since the big tech titans rely on businesses of all different sizes to spend on their digital advertising services, one could conclude that such robust revenue figures in their advertising segments are a healthy indicator for the economy.
Apple has a Big, Untapped Growth Opportunity
Apple is already one of the world’s most popular and recognizable brands, but that doesn’t mean that the company still doesn’t have a few tricks up its sleeve, according to a bullish Wells Fargo note.
Apple’s Mac desktops are already popular in the creative and software developer spaces. But analyst Aaron Rakers says the tech giant could be at an inflection point at which the enterprise and commercial markets adopt the Mac in a big way.
“While Apple’s Mac revenue only accounts for about 10% of total revenue, we have seen Apple become increasingly vocal about the adoption of Macs in the enterprise space,” Rakers said.
Wells Fargo analysts identified three different drivers for this adoption: Apple’s ability to leverage the proliferation of its M1-series processors, which it developed internally; the expanding adoption of as-a-service offerings like Apple Business Essentials; and work demographics expanding support for giving employees the option to choose their devices.
Apple Has New Perks to Hire and Retain Employees
The Covid-19 pandemic has prompted many employees to revise their relationship to work. Above all, it changed the power balance between companies and their employees, leading to the phenomenon of the Great Resignation.
In an increasingly tight labor market, companies have no choice but to fight to attract staff. It is no longer enough to be a big name, a world-renowned brand to hope to hire easily. Apple got it.
Tim Cook’s Cupertino, Calif., group, which operates 270 physical stores in the U.S., will increase benefits for all employees at these stores, those working part-time as well as full-time, according to Bloomberg, citing anonymous sources.
Apple will offer double-paid sick days for part-time and full-time employees. Employees will now be able to use them for mental-health reasons or to take family members to the doctor. In total, these changes will give 12 paid sick days to full-time employees, for example.
As for part-time employees, they will receive six days of paid vacation, a first, and also paid parental leave, another first. This benefit will cover up to six weeks.
They will also have access to low-cost emergency assistance for their children and elderly family members.
Here’s a breakdown list of the technology and FAANG/MAMAA stocks to watch right now based on their performance over the past week:
More on Facebook…
Employees will sometimes ask their co-workers to punch in for them at a job site. In response, some companies, like Facebook and McDonald’s (MCD) – Get McDonald’s Corporation Report, have turned to biometrics–unique physical, human characteristics–to digitally identify who’s who and what they’ve been doing. McDonald’s recently employed this method, using a finger or handprint scanner as a primary meth
od to clock in at locations in Illinois. The fast-food giant also installed fingerprint scanners on cash registers as a way of detecting fraud and keeping track of who had access to the registers.
In 2020, Facebook’s parent company Meta agreed to pay $650 million to settle a biometrics lawsuit, and analysts believe there will be more of these cases as companies try to improve security while respecting an employee’s privacy. “Cases against employers who use biometric timekeeping have become extremely common over the last 5-10 years,” said Matthew Kugler, associate professor at Northwestern University’s Pritzker School of Law.
TheStreet Quant Ratings rates Meta Platforms (formerly Facebook) as a Buy with a rating score of B+.
More on Apple…
Apple shares jumped higher this past week after the tech giant unveiled its ‘Square Killer’ payments system that allows users to make contactless purchases on their iPhones. Apple said the new service, which it dubs “Tap to Pay on iPhone,” will allow users to “seamlessly and securely” make purchases using Apple Pay, or other contactless payment methods, embedded in its signature smartphone or AppleWatch. Shopify (SHOP) – Get Shopify, Inc. Class A Report and Stripe will be the first to offer the new payments system, Apple said, starting in the spring of this year.
The move by Apple is also seen as a significant challenge to the business model of Block Inc. (SQ) – Get Square, Inc. Class A Report, whose Square payments system is found in small and medium-sized businesses around the country. “As more consumers are tapping to pay with digital wallets and credit cards, Tap to Pay on iPhone will provide businesses with a secure, private, and easy way to accept contactless payments and unlock new checkout experiences using the power, security, and convenience of iPhone,” said Apple’s vice president for Apple Pay and Apple Wallet Jennifer Bailey.
TheStreet Quant Ratings rates Apple as a Buy with a rating score of A.
Peloton
An Apple takeover of Peloton (PTON) – Get Peloton Interactive, Inc. Class A Report could be logical to quickly achieve its objective of transforming the industries that it bets big on, which includes the fitness industry where it launched its Fitness+ service in 2020. A kind of springboard, a bit like the takeover of Beats had propelled Apple Music and Tim Cook’s group into the music and hype sphere. Apple is sitting on a war chest of billions of dollars and indeed can get its hands on Peloton without breaking the bank. It would even be a pittance. Peloton recently had a market capitalization of a little bit over $11 billion.
But would Apple make an offer to buy Peloton? To answer that question, it’s worth looking at what Peloton can offer Apple. The activity of the fitness group is rather simple to understand. It is divided into two: a part dedicated to consumer hardware and another to contents such as class subscriptions that allow customers to take an assortment of live and on-demand classes.
TheStreet Quant Ratings rates Peloton as a Sell with a rating score of D.
Netflix
It would appear that the divorce between Walt Disney Co. (DIS) – Get Walt Disney Company Report and Netflix (NFLX) – Get Netflix, Inc. Report is now completely finalized, which means that Marvel can finally start seeing other people, or in this case, come home. Twitter and comic book fan sites were abuzz with rumors that Netflix’s Marvel Cinematic Universe shows would be disappearing at the end of the month after fans noticed the disclaimer “This show is available until March 1st.”
And now the newly online-only Entertainment Weekly has confirmed that all of Netflix’s Marvel shows will disappear at midnight on March 1st, as the rights will have expired by then, officially reverting back to Disney on Disney+. As of now, you only have two weeks and change to watch all three seasons of “Daredevil,” Jessica Jones,” “Luke Cage,” two seasons of “The Punisher” and “Iron Fist” and the team-up event miniseries “The Defenders.”
TheStreet Quant Ratings rates Spotify as a Buy with a rating score of B-.
Twilio
Shares of software company Twilio (TWLO) – Get Twilio, Inc. Class A Report surged by 28% before paring back gains to 19% during extended trading hours this past week after it reported earnings and sales that beat Wall Street analyst estimates. “Our fourth quarter capped off an amazing year of results as we delivered more than $2.8 billion in revenue for the year, growing 61% year-over-year,” Twilio CEO Jeff Lawson said in a statement.
An adjusted loss of 20 cents a share on revenue of $773 million was the estimate from analysts on average, according to FactSet. Twilio estimates first-quarter revenue guidance of $855 million to $865 million. The company reported a fourth-quarter loss of $291.4 million or $1.63 a share. Revenue for the company posted at $842.7 million, an increase of 54% from $548.1 million a year ago.
TheStreet Quant Ratings rates Twilio as a Sell with a rating score of D+.
Amazon
The Soros Fund Management filing showed that it reduced its stakes in technology titans Amazon and Alphabet. In addition, it cut back on its holding in the exchange-traded fund Invesco QQQ Trust (QQQM) , which is the biggest ETF that tracks the Nasdaq-100 index. Soros Fund Management owned $9.4 million of QQQ as of Dec. 31, down from $356.2 million at the end of the third quarter, according to Bloomberg. And Soros Fund Management also disclosed a new, $13.3 million holding in Peloton.
Amazon posted stronger-than-expected fourth-quarter earnings, powered in part by its web services business, and it unveiled a price increase for its Prime members. Amazon’s net income nearly doubled from last year to $14.3 billion, thanks in large part to an $11.8 billion boost from Amazon’s stake in EV maker Rivian Automotive (RIVN) – Get Rivian Automotive, Inc. Class A Report. Still, sales were up 9% to a record $137.5 billion, while revenues at Amazon Web Services soared 40% to a record $17.8 billion.
TheStreet Quant Ratings rates Amazon as a Buy with a rating score of B-.
Twitter (TWTR) – Get Twitter, Inc. Report share
s powered higher this past week after the micro-blogging website said it would buy back $4 billion in stock after posting softer-than-expected fourth-quarter earnings. Twitter said non-GAAP earnings for the three months ending in December were pegged at 33 cents per share, down 13.1% from the same period last year and 2 cents shy of the Street consensus forecast. Group revenues rose 22% to $1.57 billion, matching Street forecasts, with $1.47 billion coming from its advertising division.
Twitter said average monetizable daily active users, its term for the number of daily users who can view ads, rose 2.8% from the September quarter to 217 million, but that figure only included a 1 million gain of U.S.-based users. Looking into the coming year, Twitter said it sees revenue growth in the “low to mid 20% range” and held onto its 2021 guidance that sees $7.5 billion in revenues and 315 million daily active users by 2023.
TheStreet Quant Ratings rates Twitter as a Hold with a rating score of C-.
Sony
Japanese consumer electronics manufacturer Sony’s (SNE) – Get Sony Corp. Report new voice command update “Hey, PlayStation!” will now compete with tech giant Amazon’s voice assistant Alexa. Right now people all over the world use Amazon’s Alexa to do everyday tasks like checking the news, listening to music, or playing a game. Users can also use their voice to control cloud-connected devices.
Sony is testing a similar feature that enables voice commands for finding and opening games, apps, and settings, as well as controlling media playback on the PlayStation 5 console. The voice command feature by Sony is currently available in English for beta participants with accounts registered to the U.S. and U.K., the company said. The final system software updates will be available globally later this year, the company said. It remains to be seen if “Hey, PlayStation!” will mirror Alexa’s misadventures.
TheStreet Quant Ratings does not have a rating for Sony.
Samsung
Samsung (SSNLF) is retooling and reloading its mobile hardware as the company enters a new chapter in its war against Apple for mobile phone dominance. But will the company’s new offerings be enough? This week, Samsung unveiled the Galaxy S22 Ultra, which is expected to take over for the Galaxy Note, saying that it is the most powerful Ultra device the company has ever made. “This is a leap forward for mobile technology, setting a new standard for what a smartphone can be,” TM Roh, president of Samsung’s mobile business said.
Time will tell, but Samsung is bringing the heat with its new slate of phones. While the iPhone holds an iconic place in the mobile world, Samsung is still the top dog and is looking to hold onto its spot. Apple hasn’t given any indication that its oft-rumored iPhone Flip is hitting the market anytime soon, while Samsung seems on the cusp of unveiling its own version of the phone.
TheStreet Quant Ratings does not have a rating for Samsung.
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