Another busy day in the land of tech stocks and the news is still (mostly) good. You'll recall that on Tuesday, Snap impressed and Wednesday it was Facebook's turn. On Thursday, the good cheer spread to Google, Intel, and Expedia, though Amazon was less pleasing. And by Friday morning, Twitter was in on the party, too.
Given how much ink and/or pixels we've spilled on the story of the "tech-lash" and all the regulatory problems ahead, it's worth noting that the core businesses of the largest companies are still chugging ahead. In an economy where the U.S. gross domestic product is growing at about 2%, Snap's revenue grew 48%, Facebook's grew 28%, and Google's increased 19%. Even "disappointing" Amazon boosted its sales 19%. And it's all been pretty well anticipated on Wall Street, as these same companies have (mostly) been among the best performers on the stock market this year as well. As of yesterday's close, Snap's share price was up 221% in 2019, Facebook's 53%, and Amazon's 31%. Google was lagging with only a 9% gain, but it's up another 8% in premarket trading this morning.
"Like a championship boxer that had been momentarily and unexpectedly knocked to the canvas, Alphabet delivered a series of well-timed punches that returned them to previous winning form," analyst Michael Nathanson observed.
It's always clever to predict that things are about to change, but most of the time, they stay the same. A body in motion tends to stay in motion, as Sir Isaac Newton phrased it. The basic trends feeding the tech giants, like the shift to online entertainment and e-commerce and the proliferation of more computing power and connectivity to more people and more places, continue unbated. It will take some awfully significant regulatory changes to alter that momentum.
Next week, we hear from Apple. Wall Street analysts expect Tuesday's report will show that sales came in around $53.4 billion, unchanged from last year (when Apple's revenue was still growing a healthy 17%). Falling iPhone sales should be offset by rising sales of services, wearables, and maybe iPads, according to the consensus view. But Apple's stock price has also risen a healthy 32% in 2019, reflecting, perhaps, greater optimism. Let's see if Tim Cook & Co. can keep the party rolling.
On Twitter: @ampressman
Called it. The much-rumored sale of Intel’s flailing smartphone modem business to Apple for $1 billion is finally official. The two companies confirmed the transaction on Thursday, though Intel retains the right to use the modem tech in non-phone devices likes PCs and cars. Not-so-confirmed is the closing of T-Mobile’s merger with Sprint. The latest hang-up is the Justice Department apparently trying to convince the 14 state attorneys general that have sued to block the deal to back down. That led to the bizarre situation on Thursday of Minnesota AG Keith Ellison issuing a statement blasting the deal, then pulling the statement off his web site, then having his spokesman say “it wasn’t supposed to happen.” Stay tuned. The DOJ has scheduled a mystery press announcement for 11 a.m. ET on Friday.
Called it, II. Speaking of news events you probably anticipated, Japanese billionaire Masayoshi Son’s SoftBank Group closed the fundraising for its second massive tech investing fund, dubbed the Vision Fund 2, with $108 billion commitments from investors including Apple and Microsoft.
Called it, part three. Okay, I know those last two items were fairly predictable, but this one was an absolute lock. Remember at the height of bitcoin mania in late 2017 when small-cap stock Long Island Iced Tea Corp. changed its name to Long Blockchain, sending its share price up almost 300%? Now the FBI is investigating the company for possible insider trading and securities fraud, Quartz reports. Shocker.
So called it. Predictable? This one was fated, set in stone, undeniable. The Senate finally released a redacted version of its investigation of Russian attacks on the 2016 election. You will not be surprised to learn that the attacks were far more extensive than previously reported and that vulnerabilities likely remain, even as Mitch McConnell is blocking action on a bill to bolster election security. Sigh.
A small addition. We noted yesterday that Chinese ride service Didi Chuxing created a new joint venture with Toyota. The venture also includes a third party, GAC Toyota Motor, which itself is a joint venture between Toyota and Guangzhou Automobile Group.
FOR YOUR WEEKEND READING PLEASURE
A few longer reads that I came across this week that may be appealing for your weekend reading pleasure:
Apple Music’s Next Era–And the New Leader Spurring Global Growth (Billboard)
“You hear Tim talk a lot about humanity–how we’re at the crossroads between the liberal arts and technology,” says Oliver Schusser. “It’s got to be both.” The new leader of Apple Music (the Tim in question would be his boss, Apple CEO Cook) is relaxing in his sun-drenched corner office at the company’s Culver City, Calif., headquarters on a June morning, explaining–in his typically measured way–why the service he oversees hasn’t gone all-in on algorithms.
The Video Game Industry Can’t Go On Like This (Kotaku)
The wheels of the games industry keep turning, in spite of the strain. So how much bigger can video games get? Video games are only getting more costly, in more ways than one. And it doesn’t seem like they’re sustainable.
Khashoggi fiancée Hatice Cengiz: ‘Jamal was not their enemy’ (The Financial Times)
The doctorate student talks over the chain of events that led to the Saudi journalist’s killing in Istanbul.
Everything you ever wanted to know about the Rosetta Stone (The British Museum blog)
You’ve probably heard of the Rosetta Stone. It’s one of the most famous objects in the British Museum, but what actually is it? Take a closer look…
FOOD FOR THOUGHT
With all the problems Facebook faces in Washington, D.C., it needs all the allies it can muster. Apparently, co-founder and former top exec Chris Hughes won’t be among them. Hughes, it seems, is making the rounds on Capitol Hill to explain why Facebook should be curtailed. It’s kind of…ironic, given his half a billion dollar haul from Facebook stock. But as Washington Post reporters Elizabeth Dwoskin and Tony Romm discovered, that hasn’t stopped Hughes from making the anti-Facebook case.
After House lawmakers embarked on their broad antitrust investigation of Facebook and its fellow tech giants in June, one of the first people they consulted was Hughes, said Rep. David N. Cicilline (D-R.I.), chairman of the House Judiciary subcommittee on antitrust law. Hughes quietly paid a visit to members of the House’s top competition-focused panel earlier this month, meeting with lawmakers and their staff members to pitch many of the issues he raised in his op-ed.
Hughes presented his views as a former Facebook insider, something that lent credence to his arguments, Cicilline said. “It’s remarkable and significant to me and my colleagues that someone with such a role in creating the company has the capacity and courage, really, to say, ‘We have some challenges, some things to look at.’ ”
IN CASE YOU MISSED IT
3 in 10 U.S. Homes Don’t Have Broadband: Study By Chris Morris
BEFORE YOU GO
A long-time science fiction staple is turning into reality. A SpaceX rocket last month lofted the Planetary Society’s LightSail 2 spacecraft into orbit and, on Tuesday, it was time to test the craft’s futuristic feature: a solar sail. The tiny craft, about the size of a shoebox, successfully deployed the sail, which can catch photons from the sun to generate thrust. There’s even video.