Sometimes blowout earnings aren¡¯t enough. For the third quarter in a row, Facebook Inc. and Apple Inc. generated billions upon billions in profits and flexed the power of their dominant businesses. Despite the impressive showings, the market reacted with a shrug ¡ª and perhaps for good reason.
Both technology companies reported strong quarterly earnings late Wednesday that handily beat Wall Street expectations. Facebook posted adjusted earnings per share of $3.88 compared with the $3.22 estimate, and said sales increased by 33% ¡ª much faster than the 22% growth it notched in its prior quarter. Likewise, Apple reported earnings per share of $1.68, compared to the $1.42 consensus, along with a revenue jump of 21% and an all-time high quarterly profit of $28.8 billion. Investors are already looking past these mind-boggling results, though. The reality is that this strong momentum won¡¯t be easy to sustain.
Facebook was upfront, cautioning investors about the full year. In its release, chief financial officer David Wehner said the company faces ¡°significant uncertainty¡± and expects pressure on its growth rate in the second half of 2021, citing the potential for e-commerce to moderate and the possibility of changes in the regulatory environment. While the company didn¡¯t give much detail on what it sees on the latter front, it isn¡¯t hard to imagine what that may entail.
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