Two global tech juggernauts — Apple and Facebook, have lived far beyond global investors’ expectations with their latest earnings results. The companies’ financial results, which were released late last night, showed Apple and Facebook recorded an impressive surge in revenue in spite of the COVID-19 pandemic.
Apple Inc’s Q3 revenue smashed Wall Street forecasts in spite of COVID-19 restrictions, showing consumers bought more new iPads, iPhones, and Mac computers to stay connected during the COVID-19 era. Apple shares gained about 6.3% in extended trading.
Apple, which is the world’s largest tech company, also disclosed a four-for-one stock split after its stock gained more than 80% in the past year.
Fiscal third-quarter revenue stood at $59.7 billion, a record for the June period, Apple disclosed in a statement. That was up 11% from a year earlier and beat analysts’ estimates of $52.3 billion, according to a copy of the consolidated financial statements which was seen by Nairametrics.
Apple’s Chief Executive Officer, Tim Cook, was quoted in a press statement by the company to have said that the company’s positive performance is indicative of the important role the company’s products play in people’s lives.
“Apple’s record June quarter was driven by double-digit growth in both Products and Services and growth in each of our geographic segments. In uncertain times, this performance is a testament to the important role our products play in our customers’ lives.”
Why it’s happening: cheap access to funds in 2020 has helped global stock traders in placing more bets in growth stocks such as Apple and Facebook, thereby resulting in their astronomical rise in valuations in spite of COVID-19. These companies also have good macros in their businesses, partly due to low debts, high-profit margins, and the fact that more people are isolated and mostly working remotely.
Focus on Facebook’s financial performance
Meanwhile, Facebook Inc’s Q2 financials beat analysts’ highest estimates, gaining growth from a COVID-19 pandemic-fueled disruption in global digital advertising in 2020. The company’s apps continue to bring new users.
Facebook reported that its revenue surged by 11% to $18.7 billion, compared with the $17.3 billion forecasted by analysts. Facebook’s main social app logged 2.7 billion monthly active users in the period in review compared with the 2.63 billion average estimates of analysts polled by Bloomberg. Shares jumped about 6.5% in late trading.
This impressive earning result boosted Facebook shares gaining as high as $254 in extended trading t, on track to set a new record after closing at $234.50. The stock had gained 14% so far this year.
Meanwhile, Stephen Innes, the Chief Global Market Strategist at AxiCorp, said it looks like a bargain to buy US stocks now, in spite of the high valuations recorded recently in the U.S stock market. In a note to Nairametrics, he explained that “for stock market investors, it is all about the zero forever Fed policy that makes equities look much less expensive on forwarding price-earnings ratios for 2021 through 2023 as the Fed is likely on a lengthy and extended hold. With interest rates low forever, you’re buying future earning forever from a ridiculously cheap present value perspective.”