Our views on topical issues TALKING POINT
01 August 2019 | SHARES | 17ZĞǀĞŶƵĞŐƌŽǁƚŚŽĨϮςй
ƐŚŽǁĞĚĂĐĐĞůĞƌĂƟŽŶŽŶƚŚĞ
previous quarter and it is worth
ŶŽƟŶŐƚŚĂƚǁŚŝůĞƚŚĞƐŚĂƌĞƐ
ĞĂƐĞĚďĂĐŬŵŽĚĞƐƚůLJƚŽΨϭεε͘ϳρ
following its earnings update,
the stock remains an astonishing
κϳйƵƉLJĞĂƌͲƚŽͲĚĂƚĞ͘
dǁŝƩĞƌĂůƐŽũƵŵƉĞĚϭϬйƚŽ
Ψκϭ͘εςĂŌĞƌďĞĂƟŶŐƌĞǀĞŶƵĞ
ĂŶĚƵƐĞƌŐƌŽǁƚŚĞƐƟŵĂƚĞƐ͕ǁŚŝůĞ
Snapchat-owner Snap reported
ůŽǁĞƌƚŚĂŶĂŶƟĐŝƉĂƚĞĚƋƵĂƌƚĞƌůLJ
losses and strong revenue and
ƵƐĞƌŐƌŽǁƚŚ͘^ŶĂƉ͛ƐƐŚĂƌĞƐ
ƌŽĐŬĞƚĞĚƚŽΨϭϳ͘Θϳ͕ŝƚƐŚŝŐŚĞƐƚŝŶ
ǁĞůůŽǀĞƌĂLJĞĂƌ͘
DKE͛^>KE'ͳd ZD&Kh^
DŽƌĞĨƌƵƐƚƌĂƟŶŐĨŽƌůŽŶŐͲƚĞƌŵ
ŝŶǀĞƐƚŽƌƐǁŝůůďĞƚŚĞŶĞŐĂƟǀĞ
ƌĞĂĐƟŽŶƚŽĂŵŽĚĞƐƚĞĂƌŶŝŶŐƐ
ŵŝƐƐďLJŵĂnjŽŶ͘dŚĞŽŶůŝŶĞ
ƐŚŽƉƉŝŶŐĂŶĚĐůŽƵĚĐŽŵƉƵƟŶŐ
ŐŝĂŶƚ͛ƐΨρ͘ϮϮƉĞƌƐŚĂƌĞŽĨ
earnings fell short of analysts’
Ψρ͘ρϳĞƐƟŵĂƚĞ͘/ƚƐƐŚĂƌĞƐĚŝƉƉĞĚ
ϭ͘ςйƚŽΨϭ͕εκϯŝŶƌĞƐƉŽŶƐĞ͘
This was largely caused by
ůĂǀŝƐŚŝŶǀĞƐƚŵĞŶƚ;ĂďŽƵƚΨΘϬϬŵͿ
ƚŽĞdžƉĂŶĚŝƚƐŽŶĞͲĚĂLJWƌŝŵĞ
deliveries designed to seed
future growth, a move that
many longer-term stock owners
ǁŽƵůĚƐƵƉƉŽƌƚ͘
ĨŽƵƌƚŚƋƵĂƌƚĞƌϮϬϭεƌĞƐƵůƚƐ
ĨƌŽŵDŝĐƌŽƐŽŌ͕ƐŚŽǁŝŶŐ
another strong headline
ƉĞƌĨŽƌŵĂŶĐĞ͘dŽƚĂůƌĞǀĞŶƵĞ
ŐƌŽǁƚŚŽĨϭϮйƚŽΨϯϯ͘ϳďŶǁĂƐ
ĂŚĞĂĚŽĨŵĂƌŬĞƚĞƐƟŵĂƚĞƐ
ŽĨΨϯϮ͘ΘďŶǁŚŝůĞĂĚũƵƐƚĞĚ
ŽƉĞƌĂƟŶŐƉƌŽĮƚǁĂƐƵƉϮϬйƚŽ
ΨϭϮ͘κďŶ͘
ƐǁĞŇĂŐŐĞĚŝŶ our recent
ŝŶͲĚĞƉƚŚůŽŽŬĂƚDŝĐƌŽƐŽŌ , its
njƵƌĞĐůŽƵĚĐŽŵƉƵƟŶŐďƵƐŝŶĞƐƐ
goes from strength to strength,
ŐƌŽǁŝŶŐςκй͕ĂůďĞŝƚƚŽĂŶ
ƵŶƐƉĞĐŝĮĞĚŶƵŵďĞƌ͘
DŝĐƌŽƐŽŌďĂƌĞůLJŵŽǀĞĚ
ŽŶƚŚĞĚĂLJ;ĂĚĚŝŶŐΨϬ͘ϭρƚŽ
Ψϭϯς͘κϮͿLJĞƚŝƚŝƐǁŽƌƚŚŶŽƟŶŐ
the stock was already close to
record highs, a mark the shares
have subsequently surpassed
ĂŐĂŝŶ͘
We recently launched a
ŶĞǁƐĞƌŝĞƐŽĨĂƌƟĐůĞƐĂŶĂůLJƐŝŶŐ
the major overseas-listed stocks
and will look at some of the
FANGs in more detail in future
ĞĚŝƟŽŶƐŽĨ Shares ͘ŶŽƚŚĞƌŶĞŐĂƟǀĞĚĂƚĂƉŽŝŶƚ
lurking in the update came from
its Amazon Web Services cloud
ĐŽŵƉƵƟŶŐĂƌŵ͕Žƌt^ĂƐŝƚŝƐ
ƚLJƉŝĐĂůůLJŬŶŽǁŶ͘
The unit saw revenue growth
ĚŝƉďĞůŽǁκϬйĨŽƌƚŚĞĮƌƐƚƟŵĞ
Ăƚϯϳй͘
Investors were also concerned
with falling subscriber numbers
ŝŶƚŚĞh^ĨŽƌEĞƞůŝdžǁŚŝůĞ
ŽǀĞƌƐĞĂƐĞdžƉĂŶƐŝŽŶƐůŽǁĞĚƚŽŽ͘
Overall subscribers grew by
Ϯ͘ϳŵƚŽϭρϭ͘ρςŵďƵƚƚŚŝƐǁĂƐ
well short of the company’s
ĨŽƌĞĐĂƐƚŽĨκ͘ϳŵĂŶĚƚŚĞρŵŶĞƚ
ĂĚĚŝƟŽŶƐƚŚĂƚǁĞƌĞĞdžƉĞĐƚĞĚďLJ
ƚŚĞŵĂƌŬĞƚ͘
The on-demand streaming
dsŵĂƌŬĞƚŝƐŐĞƫŶŐƚŽƵŐŚĞƌďLJ
the day with Disney and AT&T
joining Amazon Prime and a
ŚŽƐƚŽĨŽƚŚĞƌƐ͘tŚŝĐŚŵĂŬĞƐŝƚ
ƉŽƐƐŝďůLJŝůůƵƐƚƌĂƟǀĞƚŚĂƚ
EĞƞůŝdž͛ƐƐƵďƐĐƌŝďĞƌƐůŽǁĚŽǁŶ
was more acute in markets
ǁŚĞƌĞEĞƞůŝdžŚĂƐďĞĞŶĨŽƌĐĞĚ
to increase prices in order to
keep up with its heavy content
ƐƉĞŶĚŝŶŐ͘MICROSOFT DRIVES AHEAD
There were more impressiveFACEBOOK QUARTERLY
EPS VS CONSENSUS$1.99 VS $1.
AMAZON QUARTERLY
EPS VS CONSENSUS$5.22 VS $5.
MICROSOFT QUARTERLY
EPS VS CONSENSUS$1.37 VS $1.
By Steven Frazer
News Editor