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Vested Shorts: Apple’s $90.75B quarter, US adds 175K jobs, Airbnb’s new feature, and Coinbase’s 72% revenue surge

by Parth Parikh
May 4, 2024
4 min read
Vested Shorts: Apple’s $90.75B quarter, US adds 175K jobs, Airbnb’s new feature, and Coinbase’s 72% revenue surge

In today’s edition

  • Apple: Q1 earnings
  • Economy: Cooling Labor Market
  • Airbnb: Pivoting strategy
  • Strategic Licensing between FT and OpenAI
  • Coinbase: 72% growth in revenue

Market Snapshot

US stocks concluded the week on a high note, propelled by optimism that the Federal Reserve might ease up on interest rates in response to the latest labor market data. The S&P 500 and Nasdaq Composite each touched three-week highs, buoyed by the Labor Department’s report indicating weaker-than-expected job growth and a slowdown in wage increases last month.

In the commodities sector, West Texas Intermediate (WTI) Crude Oil futures continued their recent decline, with prices settling just above $78 per barrel, the lowest point since mid-March. This nearly 7% weekly drop in crude oil prices reflects growing US supplies and signs of diminishing fuel demand, underscoring broader economic shifts that may influence Federal Reserve policy in the coming months.

Stock market closing data for the week from April 29th to May 3rd, 2024

News Summaries

Apple’s (Explore: AAPL) first quarter of 2024 showed a resilient financial performance despite a 4% decline in year-over-year revenue, totalling $90.75 billion, which slightly surpassed the expectations set at $90.3 billion. This performance was bolstered by a 6% increase in share value following the announcement of $110 billion in share buybacks and a 4% increase in dividends. While iPhone sales fell by 10% to $46 billion, service revenues, including offerings like the App Store and Apple Pay, climbed 14% to a record $23.9bn. These figures reflect a cautious optimism in Apple’s strategy, as it navigates challenges such as declining market leadership in smartphones and regulatory pressures in the US and EU. Despite these hurdles, the company remains confident in its future, evidenced by its aggressive capital return strategy and anticipation of new product launches.

In April, the US economy added 175,000 jobs, significantly below the expected 241,000, marking the weakest job growth in six months and prompting speculation about potential Federal Reserve interest rate cuts. This slowdown was accompanied by a slight increase in unemployment to 3.9% and softer earnings growth, contrasting with prior robust employment increases in sectors like healthcare and retail. Financial markets reacted by adjusting the anticipated timing of the Fed’s interest rate cuts, reflecting a shift in expectations due to these weaker labor indicators. While the cooling job market suggests a potential shift away from an overheating economy, thus alleviating some pressure on the Fed, concerns remain about the overall pace of economic growth and inflation control, influencing the central bank’s upcoming decisions. President Biden, meanwhile, emphasized the resilience of the U.S. economy under his administration, framing the current figures as part of a successful economic strategy.

Airbnb (Explore: ABNB), which has grown to over 7.7 million listings globally in its 15-year tenure, is introducing the ‘Icons’ feature aimed at offering guests unique stays and experiences, like sleeping in Pixar’s balloon-lifted house or inside the Musée d’Orsay’s clock. This initiative comes as Airbnb faces a growth slowdown, with annual booking increases decelerating to 12% from 20% previously, and as cities like New York and Paris implement regulations to curb short-term rentals amid housing shortages. In response to these challenges, CEO Brian Chesky has positioned 2024 as a critical year for Airbnb, signaling a strategic pivot towards broadening the company’s focus beyond traditional travel offerings to include distinctive experiences. This shift also aligns with recent policy updates, such as the global ban on indoor security cameras, enhancing guest privacy and trust.

The Financial Times has entered into a licensing agreement with OpenAI, permitting the AI developer to use its archival content to train generative AI models capable of producing human-like text, images, and code. This partnership also facilitates the integration of summaries from FT articles into ChatGPT responses, enhancing accessibility to FT’s journalism for ChatGPT’s 100 million users globally while directing traffic back to the original content on FT.com. This deal marks OpenAI’s fifth major collaboration with global news entities over the past year, aligning with its broader initiative to enhance AI capabilities responsibly while compensating and attributing content creators. This strategy not only aims to enrich the ChatGPT user experience with reputable sources but also seeks to establish a sustainable model of cooperation between AI technology firms and news publishers, amidst broader industry dialogues on fair use and compensation for journalistic content used in AI applications.

From the World of Crypto

Coinbase Global (Explore: COIN), the US’s largest cryptocurrency exchange, recently disclosed impressive first-quarter results, showcasing its robust performance amid favorable crypto market conditions. The company reported a substantial increase in total revenue, reaching $1.6 billion, which marks a 72% rise from the previous quarter. This growth was buoyed by a $737 million pre-tax gain from crypto assets, attributed to new accounting standards. Notably, transaction revenues from consumer activities surged by 99% to $935 million. However, beyond these numbers, a more significant shift in Coinbase’s strategy was highlighted during their earnings call. CEO Brian Armstrong emphasized the company’s focus on enhancing payment transactions, aiming for near-instant processing times and minimal costs, leveraging their partnership with Circle and the development of Base, their layer-2 network.

Armstrong’s vision for Coinbase is pivoting towards daily utility in payments, suggesting a future where the platform supports low-cost, high-frequency applications like decentralized social networks and gaming. This shift is not just a growth strategy but a necessity to adapt to the evolving demands of the digital asset ecosystem. The company’s financial health, demonstrated by the recent earnings, supports these ambitious technological endeavours, setting the stage for what could be a transformative period in how digital transactions are handled globally. Meanwhile, the detailed breakout of new revenue streams from payment-related activities, amounting to $56 million and growing by 137% quarter-over-quarter, offers investors a clearer view of Coinbase’s strategic direction and potential growth areas.

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