L'Oréal’s not so beautiful year ??

Hey there,

This week, L'Oréal’s earnings disappoint, Spotify hits 600 million monthly active users, and Uber records its first-ever yearly profit.?

??But first, the macro wrap-up:

The S&P 500 hit a new record of 5,000 points on Thursday, after better-than-expected earnings from some of its major stocks.

L'Oréal slips 7% as earnings disappoint ??

Up $6 bill: Last night, L'Oréal reported its Q4 earnings for 2023, closing the year with $44bn in revenue, $6bn more than 2022. But, sales in Asia lagged, leading to a drop in share price.?

• Trouble in China: A year marked by geopolitical tensions, inflation and a slowing beauty market in China led to profits coming in below analysts’ forecasts for 2023.
• Bonjour beauty: But, there is some good news. Its dermatological beauty and consumer product divisions led the surge, did leave investors impressed thanks to growth of 29% and 15% respectively.?

Uber up 6% after announcing first-ever annual profit ??

A monumental moment: After 15 years, Uber has finally recorded an annual net profit. It comes as demand for taxis and deliveries have soared to new heights, as well as growing its ad business inside the app.

• $11bn gain: On Wednesday, Uber shared a net profit of $1.9bn for 2023, compared with a $9.1bn loss in 2022. That’s a staggering $11bn improvement.?
• Is a dividend coming? Uber has hinted it may have plans for a share buyback during its investor day, but analysts at Citi are also expecting an announcement of a first-ever dividend.

Spotify climbs 7% as active listeners grow ??

Moving towards profitability: On Tuesday, Spotify reported a narrower loss than analysts expected. The loss came in at $74m for the quarter, down from $290m this time last year.?

• Monthly active listeners: Spotify crossed the 600 million mark for monthly active listeners, helping revenue reach almost $4 billion for the year. It means it has 200 million more listeners than Apple Music and Amazon Music combined.?
• Sights set on profit: Now, Spotify wants to turn up the volume with profit. Expect new price subscription tiers, more layoffs and revised deals with top podcasters.

What have we learnt this week? ???

• The beauty market is set for growth: The largest segment in the market is personal care, which as savvy investors will know, is also L'Oréal’s largest division.?
• Growth stocks are exploring dividends: After Meta announced their dividend last week, is Uber next? Growth stocks are trying to attract a new type of investor by paying dividends.?
• Spotify is edging closer towards profitability: In the 16 years Spotify has operated, it’s never reported an annual profit. The key this year will be cost-cutting.?

Stocks to keep an eye on ??

Here are the key earnings dates to look out for next week:

• Tuesday: Coca-Cola, Airbnb, Shopify
• Wednesday: Kraft Heinz, Cisco
• Thursday: Coinbase

Author: James Ashoo

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*Figures correct as of February 9th 2024.

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