Meta shares plummet hard on weak fourth-quarter forecast and earnings miss (3 min read)
Shares of Meta plummeted in the extended trading after reporting a second straight revenue decline in Q3 and forecasted another drop in Q4. Meta is facing slowdown in online ad spending, challenges with Apple’s IOS privacy update, and losing users to TikTok. Meta’s revenues dropped 4% while expenses rose 19% from the same time last year. Revenues in their VR headsets and metaverse related business fell by nearly half from a year ago and has lost $9.4 billion so far this year. Meta stocks have already lost two-third of its value this year prior to the plunging share prices in the after market on Wednesday.
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Visa profit beats as payment volumes surge on travel demand (2 min read)
Visa reported better than expected Q3 earnings as more Americans took advantage of the strong dollar to travel and spurge on spending. Their number of transactions went up by 12% from the previous quarter. Payment volume on domicile currencies surged by 10%, while cross-border currencies jumped by 36%. Visa’s net income was $300 million higher for the quarter than last year. Their stocks were up more than 4% on Wednesday and continued into the extended trading. Shares of Mastercard also went up over the expectation of similar results in their upcoming earnings report.
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Bank of Canada Surprises With Half-Point Interest-Rate Rise to 3.75% (4 min read)
The Bank of Canada raised the key interest rate by another 0.5% to 3.75%. The increase was lighter than expected as most analysts anticipated it to go up by 0.75%. The central bank said they are trying to balance the risk of raising rates too aggressively that may lead to a severe recession while containing inflation. They also said the tightening phase is getting close to an end but still need to raise rates further to bring inflation back to the 2% target. This is the sixth consecutive rate hike by the Bank of Canada for a total of 3.5%.
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Nasdaq snaps three-day winning streak as Big Tech weighs down index (2 min read)
Both Nasdaq and the S&P 500 slid on Wednesday and snapped their three-day win streaks as big tech earnings are weighting in. Microsoft and Google fell 7.7% and 9.1% respectively after reporting a disappointing Q3 earnings on Tuesday. One expert describes the swing in the major indexes as a “tug of war” between corporate America and the Fed that has left investors trying to balance what companies reported meant and how higher rates would affect it. The first big tech earnings typically have the most impact as many investors are exposed to the industry.
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First bitcoin ETF loses record amount in its initial year (3 min read)
The first US-listed bitcoin ETF has lost more than 70% since launched. The ProShares bitcoin strategy ETF (BITO) was launched a year ago and it was one of the most successful ETF launches in history. It raised more than a billion dollars in the first week and maintained a consistent inflow throughout its life. However, BITO plunged alongside the drop in bitcoin prices as the crypto market sold off or some would call it a “crypto winter”. Other crypto related ETFs also had huge losses but their asset sizes were much smaller than BITO. Morningstar calculated that BITO has lost $1.2 billion of investors’ money, making it the worst ETF debut.
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Thematic fund resilience and inflows confound critics (5 min read)
Thematic funds are often seen as a trendy gimmick that were launched to quickly capture assets and can easily be closed down once the trend fades away. However, recent data shows that they have a longer survival rate than the typical equity funds. According to Morningstar, thematic equity funds have closed at a slower rate than non-thematic funds over every time period in the last 15 years. The results might be a surprise to some but analysts pointed out that Ark Invest, for example, is still gathering assets despite the poor performance this year.
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That's it for today! You can reply to this email if you have any comments or feedback.
Thanks,
Thomas
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