Fast Money Blog- 5/6/22
This was another big week on Wall Street, with earnings releases from many companies, including Starbucks (SBUX), Advanced Micro Devices (AMD), and Block, Inc. (SQ).
On Tuesday, May 3rd, Starbucks (SBUX) released their Q2 2022 earnings with top-line revenue of $7.6 billion, up $1 billion year-over-year.
Revenue for North America grew 17% year-over-year to $5.4 billion. International Revenue grew 4% year-over-year to $1.7 billion.
In the U.S., same-store sales climbed 12%, with a 7% increase in average ticket and a 5% increase in comparable transactions.
Active membership of Starbucks’ loyalty program also jumped 17% to 26.7 million customers.
However, outside of the U.S., International same-store sales shrank 8%, dragged down by sharp declines in China, the company’s second-largest market. Chinese same-store sales were down 23% in the quarter as the country reimposed lockdowns after Covid outbreaks.
And while Starbucks’ top-line revenue is growing, it’s not true growth, because the company is simply raising prices on their current customers, not actually growing their customer base.
We have to wait and see if Starbucks can continue their revenue growth once things normalize in China. But, because Starbucks have raised their prices and China is in lockdown, I don’t see the stock price going higher in the next 13 weeks.
Advanced Micro Devices (AMD) also reported their Q1 2022 earnings on Tuesday, March 3rd, with top line revenue of $5.8 billion, an increase of 71% year-over-year. These results include six weeks of revenue from their recently completed acquisition of Xilinx.
On a quarter-over-quarter basis, the top line increased 22%.
The Computing and Graphics segment revenue was up 33% year-over-year and up 8% quarter-over-quarter. This was driven mostly by Ryzen™ processor sales.
Revenue for the Enterprise, Embedded and Semi-Custom segment (which includes their cloud server sales) was $2.5 billion, up 88% year-over-year and 17% quarter-over-quarter.
Additionally AMD announced that its board of directors approved a new $8 billion share repurchase program.
All in all, this was a fantastic earnings release for AMD.
On Thursday, May 5th, Block, Inc. (SQ) released their Q1 2022 earnings results. The company reported quarterly revenue of $4.0 billion, down about 22% year over year. This loss was due to their bitcoin revenue which was down 50% to $1.7 billion.
Block showed some growth in its Gross Payment Volume (GPV), which came in at $43.5 billion up 31% year-over-year, but it was down from $46.3 billion in last quarter.
The company also reported $1.12 billion in transaction-based revenue, up 29% year-over-year, but again this number was down from $1.21 in the last quarter.
The good news for the company is that in the first quarter of 2022, it generated gross profit of $1.29 billion, up 34% year over year. Its Cash App generated gross profit of $624 million, up 26% year over year, while Square generated gross profit of $661 million, up 41% year over year.
Investors are also excited that Square is launching its small business lending operation called Square Loans, in Canada.
Here’s my forecast: Since we’ve seen great earnings in Square, AMD, Apple, Microsoft, Mastercard and Visa, I expect the market to begin to rise within the next 120 days, once the Federal Reserve is done raising interest rates.
Tyrone Jackson
The Wealthy Investor