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 — 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% — 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.