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Vested Shorts: Meta’s $50B buyback, Apple’s growth, AWS is still growing in double digits, UMG vs TikTok showdown

by Parth Parikh
February 3, 2024
3 min read
Vested Shorts: Meta’s $50B buyback, Apple’s growth, AWS is still growing in double digits, UMG vs TikTok showdown

In today’s edition

  • Meta’s financial milestone
  • Apple’s steady growth
  • Amazon’s cloud surge
  • UMG pulls from TikTok

Market Snapshot

This week, the S&P 500 and Dow Jones Industrial Average achieved record-high closes, driven by a surge in technology shares. This rally was significantly influenced by impressive earnings reports from industry giants Amazon (AMZN) and Meta Platforms (META), which exceeded market expectations. 

Additionally, the employment sector showcased remarkable strength, with the Labor Department’s early Friday report revealing a substantial jump in Nonfarm Payrolls by 353,000 last month, nearly doubling the anticipated figures and signalling sustained job growth into early 2024. This positive job data contributed to easing recession fears despite the implications it might have for the Federal Reserve’s interest rate policies. 

By week’s end, the S&P 500 index saw a 1.4% increase, matched by the Dow Jones Industrial Average, while the Nasdaq Composite experienced a slightly more modest gain of 1.1%.

Stock market closing data for the week from January 29 to February 2, 2024

News Summaries

Meta Platforms has announced its first-ever dividend and a $50 billion share buyback, signalling strong financial health and strategic direction. The company, parent to Facebook and Instagram, declared a quarterly dividend of 50 cents per share, payable on March 26, following impressive fourth-quarter results that led to a more than 14% increase in its share price in after-hours trading. This decision comes as part of Meta’s recovery efforts after an advertising slump, with the company’s market value recently surpassing $1 trillion. CEO Mark Zuckerberg emphasized the focus on investment in artificial intelligence (AI) and the metaverse despite the high costs associated with these technologies. The financial strategy also includes increased capital expenditures for 2024 to support AI development and infrastructure. The company’s revenue growth and proactive investment plans reflect its commitment to long-term innovation while maintaining financial stability.

Apple reported a revenue increase to $119.6 billion in the December quarter, marking a return to growth by 2% year-over-year and surpassing analysts’ expectations. This improvement was attributed to strong iPhone sales, which rose 6% to $69.7 billion, and a record performance in its services division, generating $23.1 billion, up 11% from the previous year. Despite this success, concerns lingered due to a decline in sales in China, dropping to $20.8 billion from $24 billion for the same quarter last year amid competition and geopolitical tensions. Nonetheless, Apple’s management highlighted a record number of iPhone users in China and downplayed the sales dip, attributing part of it to currency fluctuations. The mixed results underscore Apple’s resilience through its diversified revenue streams, even as challenges persist in key markets and regulatory scrutiny increases. Net income also rose to $33.9 billion, with earnings per share up 16% year-over-year, showcasing the company’s profitability amidst strategic moves to innovate, particularly in AI, as hinted by CEO Tim Cook for future updates.

Amazon reported a robust holiday season with a 13% revenue increase in its cloud division, AWS, reaching $24.2 billion for the quarter ending in December, signalling a gradual recovery from previous slowdowns in cloud growth. This uptick is partly attributed to the emerging demand for generative AI, which Amazon and other tech giants see as catalysts for future sales expansions. Despite facing challenges in maintaining the explosive growth rates of previous years, Amazon’s focus on cost-cutting and operational efficiency has improved margins, particularly in its North American operations, contributing to a return to operating profit. The company’s overall quarterly revenue surged by 14% to $170 billion, driven by strong consumer spending and growth in high-margin areas like advertising, which saw a 26% increase. 

Universal Music Group (UMG), home to stars like Taylor Swift and Drake, has pulled its music from TikTok after negotiations between the two entities failed, highlighting ongoing tensions over artist compensation. The breakdown in talks amid the Grammys week means TikTok’s over 1 billion users will no longer have access to UMG’s catalogue, impacting the app’s role as a major music discovery and viral promotion platform. Despite TikTok’s significant influence in the music industry and ByteDance’s $110 billion in sales, UMG argues that TikTok’s contribution to its revenue is minimal, pointing to a broader industry challenge where artists and labels seek fairer compensation from digital platforms. This dispute also touches on concerns over the use of AI tools and user safety, with UMG demanding better terms that reflect the value artists bring to the service. While TikTok defends its promotional value to artists, UMG’s move underscores a growing push within the music industry for platforms to offer a larger share of revenue to content creators.

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