But this season has served as a reminder of how much traders have piled into fast-growing tech stocks, coming to appreciate another metric. They are obsessed with volume, which is measured by the number of users and subscribers.
This is partly due to how low expectations are for the social media platform. The previous batch of results was so disastrous that it caused the stock to crash by 26%, resulting in the largest loss in market value for the S&P 500 on record.
However, there is also significant relief about the Meta user numbers, which have been stagnant. And while it was slightly less than Wall Street expected, it did see growth during the first three months of the year.
“The results for Meta were very well received, and all things considered,” Laura Hoy, equity analyst at Hargreaves Lansdown told me. “A lot of that was dependent on the increased number of users that were deployed.”
Facebook’s monthly active users are up 3% year over year, while Facebook’s daily active users have grown by 4%. Monthly and daily active users on the Meta group of apps, which includes Instagram and WhatsApp, grew by 6%.
These numbers matter to both companies for slightly different reasons.
Since Netflix doesn’t show ads – at least not yet – subscription fees are its main revenue stream.
But size is also necessary to justify these companies’ super-rich ratings. One year ago, Facebook was trading at more than 30 times the earnings of the past 12 months. Recently, in October, Netflix was trading at a price 70 times profits.
Big Factor: The promise that these companies will be able to take advantage of their huge user bases to make more money in the future. When growth slows significantly, it undermines the investment supply in a major way.
“Investors are used to seeing huge growth numbers for the number of users,” Hui said. “And while that calms down, it begs the question of whether these valuations, which have become so significant over the past few years, are worth it.”
This is especially true given the current scrutiny of tech companies, which look less attractive as interest rates start to rise. Wall Street has been getting a closer look at whether it got too excited about the names of the big tech companies during the pandemic.
Watch this space: Meta users didn’t bleed out in the last quarter like Netflix. But other numbers confirm its tough path as it battles rivals like TikTok, struggles to monetize popular video content and deals with disruption of its core advertising business due to changes in Apple’s privacy practices.
Mark Zuckerberg’s company reported the slowest revenue growth in years and said its profits were down 21% compared to last year. But investors are ignoring these developments, at least for the time being.
Palm oil is half of your grocery shopping. Its price can go up
Indonesia has begun restricting palm oil exports – a move that could make the global food crisis worse and push up prices for hundreds of consumer products.
The country halted exports of cooking oil and the raw materials used to manufacture it Thursday in an effort to secure domestic supplies, my CNN Business colleague Michelle Toh reported.
The Southeast Asian country is the world’s largest producer of palm oil, a common ingredient found in many of the world’s food, cosmetics, and household items. The World Wide Fund for Nature estimates that it is used in nearly 50% of all packaged products in supermarkets.
Last week’s surprise announcement sent the commodity prices higher. Malaysia’s crude palm oil futures, a global benchmark, jumped nearly 7%.
Now the market is racing to absorb the impact. The regulation, signed on Wednesday, is extensive, according to analysts at Goldman Sachs. They said that while there has been some speculation that it may be more limited, it will likely eventually cover about 90% of Indonesia’s total palm oil exports.
Palm oil prices were already under pressure after the Russian invasion of Ukraine, as markets scrambled to find alternatives to sunflower oil shipments stuck at Black Sea ports.
Indonesia’s export ban could make the situation worse. Prices of items such as cooking oil, instant noodles, snacks, baked goods and margarine could rise as a result, James Fry, chairman of consultancy LMC International, said.
“We have the perfect storm,” he said. He added that drought in South America and Canada has hampered supplies of soybean oil and canola oil.
On the Radar: One lingering question is how long Indonesia’s ban will last. It is in place “until further notice”.
Why did the Japanese yen fall to a 20-year low
The Japanese yen hasn’t been this weak in 20 years, worrying foreign exchange markets as investors race to determine how far the currency can fall.
Latest: The Japanese yen fell sharply after the Bank of Japan meeting on Thursday. It last traded at more than 130 against the US dollar, its worst level since 2002. The currency has fallen more than 13% against the dollar since the beginning of the year.
Feed the difference in the strategy of the central bank. The Federal Reserve is in the process of withdrawing support for the economy to fight the highest rate of inflation in decades. But the Bank of Japan has a different plan.
When the Bank of Japan met on Thursday, it “clearly indicated that it is not ready to end easing because the inflation target is still a long way off,” according to Min Ju Kang, chief economist at ING.
Bank Governor Haruhiko Kuroda said the bank intends to conserve funds until it sees sustained inflation approaching 2%. Deflation, or falling prices, poses problems for growth. Consumer price inflation in Japan rose 1.2% for the year to March, versus 8.5% in the United States.
But if the yen continues to weaken, it could increase the cost of living for people in the world’s third largest economy by making it more expensive to buy imported goods for businesses and consumers. This could hinder Japan’s recovery from the coronavirus pandemic.
“A weaker yen, at this point, is putting a physical strain on economic activity, by eroding disposable income and increasing costs for businesses,” Craig Bothham of Pantheon Macroeconomics told clients.
Also today: The first look at US GDP for the first three months of the year arrives at 8:30 AM ET.
Coming Soon Tomorrow: The latest reading of the Federal Reserve’s preferred inflation measure, the PCE price index.