💃 Big Earnings but low GDP

Meta, Microsoft, Eli Lilly, Robinhood, Coinbase, and more

In partnership with

Good morning investors! Yesterday was a big day with several earnings reports. Dig in now.

Today we cover:

  • US GDP disappoints

  • Microsoft beats as Meta struggles in some departments

  • Other earnings (Robinhood, Coinbase, Eli Lilly, and more)

Reminder: Our sponsor, Investing.com, is offering up to 45% off to new Investing Pro users. Check now.

📊 Economy and News 

US Q3 GDP Disappoints 

Data released Wednesday showed the U.S. economy grew at a slower pace than anticipated in the third quarter, with gross domestic product (GDP) rising by 2.8% from July to September, below economists' expectations of 3.0%, matching the previous quarter’s growth.

In contrast, the eurozone's quarterly growth surprised on the upside, reaching 0.4% compared to the 0.2% forecast. Additionally, U.S. private sector employment rose by 233,000 in October, up from a revised 159,000 the previous month, ahead of Friday’s key nonfarm payrolls report.

These indicators may shape the outlook on interest rates, as the Federal Reserve prepares for a meeting next week where it is widely expected to implement a smaller rate cut of 25 basis points.

Global hits:

Pending Home Sales Jump: In September, contracts to purchase previously owned U.S. homes saw their largest monthly increase in over four years, spurred by improved interest rates and a greater availability of properties. The National Association of Realtors (NAR) reported a 7.4% rise in its Pending Home Sales Index, moving up to 75.8 from August's 70.6, marking the highest level since March. This was notably higher than the 1.0% growth predicted by economists.

Also check: More than 250,000 Washington Post readers cancel subscriptions in revolt over non-endorsement. Elsewhere, Airbus handed over its first extra-long-range 321 narrow-body aircraft to Iberia.

📈 Stocks

S&P 500 5,813.67 (-0.33%)
DJIA 42,141.54 (-0.22%)
NASDAQ 18,607.93 (-0.56%)
BRENT CRUDE 72.93 (+2.54%)
* Prices as of Mar 3rd, 12:20 AM UTC

Big Earnings are Here (Microsoft, Meta, Eli Lilly, and More)

Microsoft reported strong fiscal first-quarter earnings, surpassing expectations with its Azure cloud business outpacing forecasts.

The company reported earnings per share of $3.30, above the expected $3.10, and revenue of $65.59 billion, exceeding the anticipated $64.51 billion. Revenue grew 16% year-over-year, ending the quarter at $65.59 billion, while net income rose to $24.67 billion from $22.29 billion last year.

Following a reporting structure change in August, Productivity and Business Processes, which now includes mobility, security, and some Windows revenue, generated $28.32 billion, surpassing the $27.90 billion forecast.

The report sent the stock up +1%.

Meta’s Mixed Result: Meta’s shares fell -2% after its third-quarter earnings report revealed lower-than-expected daily active people, despite exceeding estimates in earnings and revenue.

  • Earnings per share: $6.03 vs. $5.25 expected

  • Revenue: $40.59 billion vs. $40.29 billion expected

Meta projected fourth-quarter revenue between $45 billion and $48 billion, with the midpoint above the analyst consensus of $46.3 billion. Daily active people grew 5% year-over-year to 3.29 billion, slightly below the expected 3.31 billion.

Meta also adjusted its 2024 expense guidance to $96-98 billion, slightly down from $96-99 billion, while capital expenditure guidance increased to $38-40 billion from $37-40 billion.

Meta’s Reality Labs unit, focused on augmented and virtual reality, reported a third-quarter operating loss of $4.4 billion. Revenue for Reality Labs rose 29% year-over-year to $270 million, though it fell short of analysts' expectations of $310.4 million.

  • Eli Lilly missed profit and revenue forecasts for the third quarter on Wednesday, largely due to lower-than-expected sales of its popular weight loss drug, Zepbound, and diabetes treatment, Mounjaro. The company also lowered its full-year adjusted profit outlook to between $13.02 and $13.52 per share. Surging demand for injectable weight loss and diabetes medications has led Eli Lilly and its main competitor, Novo Nordisk, to invest billions in expanding manufacturing capacity.

  • Biogen exceeded expectations with its third-quarter revenue and adjusted earnings, prompting the company to raise its full-year profit forecast. Strong sales of its breakthrough Alzheimer’s drug, Leqembi, along with new treatments for rare diseases and depression, helped balance a year-over-year revenue decline in its multiple sclerosis portfolio.

  • Coinbase’s third-quarter revenue reached $1.2 billion, nearly double the amount from the same period last year. Diluted earnings per share rose to $0.28, a rebound from last year’s $0.01 per-share loss, though it missed analysts' expectations. Net income came in at $75.5 million, a substantial improvement from the $2.3 billion loss recorded the previous year.

  • Robinhood's shares dropped -10% in after-hours trading as its third-quarter results missed analyst expectations, despite solid growth. The company reported adjusted earnings per share of $0.17, just shy of the expected $0.18, with revenue up 36% year-over-year to $637 million, below the $653.35 million forecast. Revenue growth was led by a 72% rise in transaction-based revenue to $319 million, with options revenue up 63% to $202 million, cryptocurrency revenue more than doubling to $61 million, and net interest revenue increasing 9% to $274 million.

  • Volkswagen’s operating profit dropped to €2.86 billion ($3.1 billion), with third-quarter sales revenue declining by 0.5% year-over-year to approximately €78.5 billion. These results follow the automaker’s second revision of its 2024 annual outlook in recent months. Recently, Volkswagen has faced significant challenges, including warnings of potential plant closures in Germany and the cancellation of several labor agreements with local workers in September.

  • Swiss bank UBS exceeded third-quarter expectations, reporting a $1.4 billion profit. Net profit attributable to shareholders reached $1.43 billion, significantly higher than the $667.5 million forecasted in an LSEG analyst poll. UBS returned to profitability in the first quarter of 2024, following two consecutive losses linked to its acquisition of troubled Credit Suisse.

SMCI Troubles: Ernst & Young resigned as Super Micro's auditor last week, citing serious issues with the company’s internal controls, board independence, and accounting practices. Super Micro has faced challenges this year, including a short-seller report, delays in filing its 2024 financial statements, and an ongoing federal investigation. In its resignation letter, EY stated it was “unwilling to be associated” with the company’s financial statements, leading to a -33% drop in Super Micro’s stock.

What do you pay more attention to in an earnings report?

Login or Subscribe to participate in polls.

Sponsored by The Oxford Club

The NEXT Trillion Dollar Company?

This company just signed a MASSIVE deal with Apple.

It gets their AI tech in Apple’s iPhones and iMacs until 2040!

But it goes beyond that.

The company is getting its tech into products by Nvidia, Google, and Samsung too.

Its AI tech is so crucial…

Nvidia is actually buying up the stock too.

They’ve invested more in this one company than any other… nearly $150 million.

Is this stock the next Nvidia… which has gone up 81,700% over the last 20 years?

💵 Personal Finance

Life Insurance

Life insurance is a type of insurance that ensures your loved ones are financially protected when you're not there for them. This type of insurance is not for you but for your family.

About 52% of Americans own life insurance and nearly 41% of adults feel they do not have an adequate amount of life insurance. Among the uninsured, the top reason for not purchasing life insurance was being unsure of what type and amount of coverage to buy.

How much? Experts suggest your coverage should be 10 to 15 times your income, but the actual amount will depend on your unique needs — for example, if you have a mortgage to pay or young children to raise.

Check below for different types of life insurance to help you pick the right one:

It’s meant to replace an income stream. For example, you would insure whoever is working in your household so the proceeds could replace the lost income.

In simple words, it’s defined as “a contract between an insurance policy holder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium, upon the death of an insured person or after a set period.”

We must, however, mention that not all life policies have a cash value component. This means that you may not receive any money if your policy expires before you die. (Another reason to stay current on your plan).

Life insurance costs anywhere from $10 to $15 a month based on your location and you can get anywhere from $250,000 to over a million depending on terms and conditions. Also, in some cases, you might get it for free – such as with a bank account – so look at all your options and consider including it in your financial plan.

Check this interesting video:

💰 Be a Better Investor

“Returns matter a lot. It’s our capital”

Abigail Johnson

Resources:

What did you think of today's newsletter?

Login or Subscribe to participate in polls.

👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.