APPLE: Bitter Earnings

Apple beat earnings on Thursday, but its future guidance did not sit well with investors. After the close of Thursday's trading, Apple's shares experienced a decline in after-hours trading. This occurred as the tech behemoth disclosed a downward trend in iPhone sales for the fourth quarter. The company observed a marginal revenue dip of less than 1% for the quarter and noted a 3% fall in full-year revenue compared to fiscal 2022. Additionally, Apple has indicated prospects of a subdued performance in the forthcoming holiday quarter.

Despite these trends, Apple has managed to outperform on various key metrics, including a significant year-over-year increase of 16% in services revenue, which exceeded the expectations set by Wall Street analysts. The iPhone represents about 50% of Apple's total sales, making the release of a new version a significant event for shareholders. The iPhone 15 saw a major redesign in its premium models, which now boast titanium enclosures, along with enhancements including a zoom camera lens with greater capabilities.

The goal is to appeal to consumers who are increasingly keeping their existing phones for extended periods. Apple benefited from a favorable comparison to the previous year during this launch cycle, as the iPhone 14 Pro versions encountered supply issues owing to closures at Apple's production affiliates in China. Conversely, the iPhone 15 Pro was not subject to these constraints. Apple’s stock has been one of the highlights of 2023, as it is currently up 36% on the year with a market cap of over $2 trillion.

Earnings:

Revenue: $89.5B vs. $89.0B

Earnings Per Share: $1.46 vs. $1.39

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SBF: Guilty on All Counts

Sam Bankman-Fried, previously celebrated as a cryptocurrency wunderkind, was convicted on all charges of fraud on Thursday, following the collapse of his cryptocurrency exchange, FTX, a year earlier. This event erased the investments of thousands of its users.

The guilty verdict was handed down at approximately 7:40 p.m. Eastern Time after the federal jury in Manhattan concluded their discussions, which lasted around four hours.

As a founding member of FTX, Bankman-Fried faced multiple counts, specifically seven, including wire fraud, securities fraud, and laundering money. These charges stemmed from actions that defrauded customers of FTX and creditors of its sister hedge fund, Alameda Research.

Both firms quickly collapsed in November 2022 after some of their financial liabilities were exposed. The fact that Alameda had taken billions of dollars from FTX's customers and that much of Alameda's balance sheet comprised digital currency assets it had created was central to the case against Bankman-Fried. Unnerved by disclosures about the firm's financial position, many of FTX’s customers tried to get their money back. That set off the equivalent of a bank run.

BLOCK: From Square Roots to New Heights

Block, formerly known as Square, had a great earnings report on Thursday. Their earnings beat analyst estimates in revenue and earnings per share. They showed strong growth in Cash App and Square revenue. Net revenue for the third quarter increased by 24%, reaching $5.62 billion, up from $4.52 billion in the same quarter of the previous year. Revenue from bitcoin soared to $2.42 billion, a rise from the earlier figure of $1.76 billion. Additionally, gross profit saw a 21% increase, ascending to $1.9 billion from the former $1.57 billion. Previously, the company had forecasted its full-year adjusted EBITDA to be around $1.5 billion. Still, it has revised its expectations, predicting the adjusted EBITDA will land between $1.66 billion and $1.68 billion.

Block anticipates its adjusted operating income for the entire year to be between $205 million and $225 million, considerably higher than the earlier estimate of $25 million. The projected full-year revenue was anticipated to be $21.54 billion. While the company did not specify its expected full-year revenue, it did forecast an adjusted operating income of $875 million for 2024.

Earnings:

Revenue: $5.62 billion vs. $5.44 billion expected

Earnings Per Share: $0.55 vs. $0.47 expected

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The Credit Card Maverick

This man bought a $65 million skyscraper… on a CREDIT CARD. In 1975, Jonatan Werner used a $10,000 loan to launch a highly successful real estate business. The business is around today a well-known real estate company in North America. Werner was on the verge of buying the Royal Trust building for $65 million; he had the investment money ready but had a wild idea. He would make this multi-million dollar real estate on a credit card. Werner tells his assistant to call Royal Trust Bank and ask for authorization for this multi-million dollar purchase.

The bank agreed because they didn’t want to upset one of their most important clients. The wild part? Werner received a 2% cash-back discount on this transaction, so he bought the building for a $1.3 million discount. 

Chart of the Day

US Commercial Real Estate

US commercial real estate prices have kept sliding

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