Social media giant Facebook released incredible quarterly earnings Wednesday this week that blew through even the highest of estimates. The news sent the stock up to all time highs in after market trading, above $117.59 from $109. Facebook knocked it out of the park in all areas from user growth to earnings. Revenue was a staggering $5.38 billion for the quarter and monthly active users grew to 1.65 billion people. The users rate also grew for mobile by 21 percent, year over year, to 1.51 billion users. Facebook’s CEO, Zuckerberg stated that most users spend 50 minutes per day on Facebook, Instagram and Messenger. Facebook also owns WhatsApp but did not include its information in those stats. The markets were happiest about the 57 percent increase in advertising revenue. That is an area that has been growing in the past, continues to do so and could still grow a lot more. This contrasts with user growth, which will slow as the planet only has so many people.
The rosy glow of the iPhone seems to be losing luster in the eye of the consumer according to the new quarterly earnings from Apple this week. Apple reported its first ever decline in iPhone sales on Tuesday and this sent the stock down over 6 percent to close at the $97.82 per share by the close the next day. Apple was way up above $134.54 less than a year ago. This is also the first time the stock has been below $100 since February of this year. Sales were actually better than analysts predicted at 51 million while 50 million was predicted. It was earnings of only $1.90 per shares compared to earnings of $2 that was expected that really drove the selling pressure on the stock price. Apple has been struggling as they have had nothing new to get the market excited about and that seems to be continuing. The worry from investors is that if nothing new comes out, phone users will not upgrade their phone as often and sales will fall off a cliff. Phone sale are still two thirds of all Apple revenue.
The price of oil hit a milestone this week, crossing above $45 a barrel for the first time in 2016. The pop up was temporary on Wednesday when WTI (North American) oil hit a high of $45.16 per barrel. The price fell off midway through the day when oil inventories came out and they were not as good as expected. Markets were expecting a draw down in inventories, but the Energy Information Administration saw inventories climb 2 million barrels to an all-time peak of 540.6 million barrels. Although many do not expect oil to stay around or above $45 for the week, the recent steady climb has calmed markets. Oil trading close to $30 per barrel is very tough for many world economies and every $5 thresh hold it crosses brings stability to the energy industry. The summer driving season could add increased demand going forward so I expect $45 to not feel so high shortly.