Coffee With Greta: META’s Mega Miss

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DJIA Futures: +274 (+0.9%)

SPX Futures: +6 (+0.2%)

NASDAQ Futures: -36 (-0.3%)

Good morning friends!

Futures are mixed as disappointing tech earnings weigh on the Nasdaq and a higher-than-expected GDP reading boosts the DJIA.

Let’s get right to it!

Meta Plummets After Earnings Miss

Meta (META) shares are plummeting 22.9% ahead of the open after missing Q3 profit expectations and issuing weak guidance. 

Here’s how the social media giant’s results compared to analysts’ expectations:

  • EPS: $1.64 vs $1.89 expected
  • Revenue: $27.71 billion vs $27.38 billion expected
  • Daily Active Users: 1.98 billion, in line with expectations
  • Monthly Active Users: 2.96 billion vs 2.94 billion expected
  • Average Revenue per User: $9.41 vs $9.83 expected

Revenue dropped 4%, the second straight quarter of revenue declines as Meta struggles with a broad slowdown in online ad spending. 

Costs and expenses jumped 19% compared to a year ago.

The company forecast Q4 revenue will be between $30 billion and $32.5 billion vs analysts’ expectations for $32.2 billion. 

Revenue in Meta’s virtual reality division, Reality Labs, fell to $285 million with its loss widening to $3.67 billion from $2.63 billion a year earlier.

Ford Weighed Down by Supply Chain Issues

Ford (F) shares are down 2% in premarket trade despite narrowly beating Q3 expectations.

Here’s how the automaker’s results compared to analysts’ estimates:

  • Adjusted EPS: $0.30 vs $0.27 expected
  • Revenue: $37.2 billion vs $36.25 billion expected

Ford recorded a net loss of $827 million due to continued supply chain issues and costs related to disbanding its autonomous vehicle unit. 

Adjusted profits were down 40% year over year. 

Ford updated its full-year guidance, expecting adjusted earnings before interest and taxes of about $11.5 billion vs $11.5 billion to $12.5 billion previously. 

The company raised its full-year adjusted cash flow forecast to between $9.5 billion and $10 billion vs $5.5 billion to $6.5 billion previously. 

Higher Prices Boost McDonald’s Profits

McDonald’s (MCD) shares are up 2.1% ahead of the open after beating Q3 expectations. 

Here’s how the fast food giant’s results compared to analysts’ expectations:

  • EPS: $2.68 vs $2.58 expected
  • Revenue: $5.87 billion vs $5.69 billion expected

McDonald’s did not see a slowdown in traffic even as it raised its menu prices to mitigate higher costs. 

Global same-store sales jumped 9.5%, crushing estimates of 5.8% growth. 

Same-store sales in the U.S. rose 6.1%. 

U.S. Economy Expands More than Expected

The U.S. economy expanded more than expected in Q3 as the shrinking trade deficit boosted GDP. 

The Bureau of Economic Analysis’ first estimate of Q3 GDP shows 2.6% annualized growth vs 2.3% expected. 

That’s the first positive reading of this year after the economy contracted in Q1 and Q2. 

Weekly Jobless Claims Tick Higher

Weekly jobless claims rose less than expected last week. 

The Labor Department reported 217,000 Americans filed initial claims for unemployment benefits. 

That was up by 3,000 from the previous week but lower than expectations for 220,000. 

Continuing claims rose by 55,000 to 1.44 million in the week ending October 15.

ECB Hikes Rates

The European Central Bank announced its another 75-basis point rate hike today. 

That’s the second 0.75% rate hike in a row and puts the main benchmark rate in at 1.5%, the highest level seen since 2009. 

The ECB confirmed more rate hikes are ahead. 

In its statement, the bank said, “The Governing Council… expects to raise interest rates further, to ensure the timely return of inflation to its 2% medium-term inflation target.” 

The Eurozone is experiencing record-high inflation and a slowing economy. 

Several economists have projected a 50-basis point hike in December but the ECB did not indicate the level of future hikes.

Key Earnings After the Close

Here are the key companies set to report earnings after the close today:

  • Apple (AAPL)
  • Amazon (AMZN)
  • Intel (INTC)

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