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October 24th, 2022 | 12:17 CEST

US equities reporting season: Netflix, Snap, Meta Platforms, Aspermont - Will it continue explosively?

  • Technology
  • Investments
  • fintech
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In October, the reporting season for the 3rd quarter started in the USA. This is a highly exciting time, as moves of up to 25% or more are not uncommon when a NASDAQ stock grossly deviates from its guidance. After years of bliss in the tech sector, a new parameter has also crept into the valuation of growth stocks: Interest rates. Discounted future cash flows represent the value of a stock today. If these are adjusted downward and valued at a higher discount due to increased interest rates, this can trigger significant price corrections in an emergency. Of course, this scenario also applies to upside surprises - a reason for further research.

time to read: 4 minutes | Author: André Will-Laudien
ISIN: NETFLIX INC. DL-_001 | US64110L1061 , SNAP INC. CL.A DL-_00001 | US83304A1060

Table of contents:

    Good and bad - Netflix and Snap have delivered

    In the last week, the first values have already been presented. As always, there was good news and bad. At Netflix, the lights have been green again since October 19. Thanks, in part, to the success of series such as "Stranger Things" and "Dahmer", the number of users in the past quarter rose worldwide by 2.4 to a total of 223.1 million. Analysts had only expected an increase of around 1 million. The Company is targeting 4.5 million new contracts for the full year. In the first half of the year, Netflix had lost 1.2 million customers as pressure from competitors such as Amazon Prime and Disney Plus grew. The NFLX share has had one of its strongest weeks, gaining 38% in October alone. With a market cap of USD 128 billion, revenue is again valued at a factor of 4, and the 2023 P/E ratio is 27.5. There is already a lot of hope for good business priced in here.

    Things went differently for Snap. The social media platform reported on the 4th quarter and on an annual basis achieved only slightly increased sales of USD 1.13 compared to USD 1.07 billion. The bottom line was a sharply higher loss of USD 359.5, up from USD 71.9 million a year earlier. Overall, this showed Snap's slowest revenue growth to date since its 2017 IPO. The Company has its work cut out for it against rivals like TikTok as it goes after the all-important online advertising revenue pie. Young users have been favoring Chinese provider TikTok more for the last 2 years when it comes to sharing funny snapshots. The Snap share price plummeted by almost 29% after the announcement, and now the Company wants to buy back its own shares in a volume of up to USD 500 million. The stock now costs only USD 7.9 and has already accumulated an 88% price loss in 12 months.

    Aspermont Ltd. - Strong demand after the European roadshow

    Australian fintech company Aspermont Ltd. is doing much better, with shares still up 4.5% since the start of 2022, despite global stock markets losing as much as 30%. The Perth-based group is a media and fintech company rolled into one. Its core business still historically includes print media, but in its new core sectors, Aspermont is highly modern and provides over 4 million customers with specially tailored data and financial services.

    Based on a XaaS model, Aspermont offers an audience-client ecosystem that flexibly adapts to the needs of each recipient. Within a large network of information transmitters, exclusive news and data about the global raw materials industry are made available to a broad community of interested parties and investors within a B2B approach. The contacts are also used on the "Blu Horseshoe" platform to place and broker investor capital, and the volume of business requested here is increasing from quarter to quarter. The operational trend at Aspermont is convincing, as the 2022 half-year revenue has increased from AUD 7.3 million to AUD 9.3 million, and the available liquidity has grown to AUD 6.6 million.

    At a major European roadshow in September, the Company was able to attract many new investors, stock exchange turnover rose sharply, and the share price increased by around 50%. Due to the strong growth potential, the analyst firm GBC sees a price target of AUD 0.11 or EUR 0.08 on a 14-month horizon and rates the stock a buy. At a current price of EUR 0.016, this represents a fivefold potential. The exchange Tradegate offers risk-conscious investors very good liquidity in the share, but always order it with a limit.

    Meta Platforms, Amazon & Co - The week of FAANGs

    As of today, things are getting really exciting. The largest technology companies in the world are opening their books for the past quarter. For the NASDAQ and especially the DAX as a "follower", this is of particular importance and should also decide in the short term on the continuation of the correction. From a purely technical point of view, there were already positive divergent signals last week in favor of a breather to the upside.

    According to research by Barron's, the market value of the reporting companies adds up to around 25% of the capitalization of the world's heaviest index, the S&P 500. What is explosive here is that the reporting companies can adjust their outlook for 2022 for the last time and certainly also formulate an expectation for 2023. Statements on next year are likely to be very difficult, as the global economic slump and galloping inflation could weigh heavily on the consumption and investment budgets of private individuals and companies. The technology sector is also suffering from rising interest rates and the strong US dollar.

    Facebook operator Meta Platforms will report its results on October 26. The Company itself expects total revenues in a broad range of USD 26 billion to USD 28.5 billion for the latest quarter. The consensus estimate of polled analysts is USD 27.44 billion, representing a 5.4% decline from the same quarter a year ago. Accordingly, earnings per share are expected to be USD 1.82, more than 40% lower than in Q3-2021. Maybe it will not be so bad after all - the only thing that helps is to buckle up!

    The sell-off on the stock markets stopped last Friday ad hoc and sent the NASDAQ brilliantly upwards with an intraday reversal. Perhaps this is a harbinger of positive surprises in the FAANG stocks. They are all not cheap, but the valuation is already significantly lower than at the beginning of the year. The small Aspermont Ltd. has been able to surprise positively so far in 2022 and continues to grow!

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author

    Related comments:

    Commented by André Will-Laudien on September 22nd, 2023 | 07:20 CEST

    Recalculation! These are the bare figures: TUI, Saturn Oil + Gas, Deutsche Bank - Buy prices non-stop!

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    Commented by Nico Popp on September 19th, 2023 | 08:25 CEST

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    Commented by Armin Schulz on September 18th, 2023 | 07:40 CEST

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