forex morning update

Layoffs are coming to Meta and Apple cuts iPhone production

Picture of Peter Garnry
Peter Garnry

Chief Investment Strategist

Summary:  Meta did not do well with investors during and after the Q3 earnings release with large institutional investors concluding that Zuckerberg is not listening to investor concerns over its capital expenditure plans for next year and ballooning operating expenses. But the Wall Street Journal is writing that Meta is planning a large layoff to regain credibility with investors sending shares up 3% in pre-market trading. Apple is announcing a cut to iPhone production of 3 mn units as demand is declining due to inflationary pressures. Apple shares are down 1% in pre-market trading.


Is Mark Zuckerberg finally listening to investors?

Institutional investors were disappointed by Meta’s Q3 earnings but even more disappointed during the investor talks after the Q3 release as the key takeaway was that CEO Mark Zuckerberg is acting like a absolute monarch listening to no one. As result Meta’s slide continued last week below $100 and ending just above $90 on Friday. The Wall Street Journal reported yesterday that Meta is planning to lay off thousands of employees to send the signal to investors that it is serious about preserving profitability while maintaining its aggressive bet on the metaverse. Investors are reacting to this unconfirmed news sending the shares 3% higher in pre-market trading.

Zuckerberg is clearly getting to the conclusion that something has to happen with Meta’s share price down 76% from the peak and the 12-month P/E ratio plunging to around 10 which 40% below the S&P 500. If Meta can prove that it can stabilize operating income through layoffs while maintaining growth in its core business and show more promising progress on its metaverse bet, then the P/E ratio could recover back to the S&P 500 average. In this event, the stock has a 60% gain potential, but such a move is not risk-free for investors. The key risks for Meta is the competition from TikTok, lack of monetization of WhatsApp, higher energy costs running datacenters, cash compensation pressures due to employee stock options losing value, and institutional investors continuing selling their shares.

7_PG_1
Meta share price | Source: Saxo

Apple’s services will shield the worst from hardware demand fall

Another US technology company in focus today is Apple announcing that it is cutting its iPhone production target by 3mn units which is roughly 1.5% of its annual volume. While this is a small figure it is still a big change for Apple that is used to see volume grow and the company has recently hiked prices on its services to offset the weakness in its hardware division. The Services segment has recently seen its gross profit decline for two straight quarters which is the first time for Apple and part of the explanation is higher energy costs running its datacenters. This explains the recent price hikes on its services such as TV streaming, music etc., and the move will help Apple to offset the downturn in hardware, and because its strong market position Apple is in a good place to preserve margins by hiking prices.

7_PG_2
7_PG_3
Apple share price | Source: Saxo

Quarterly Outlook

01 /

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Chief Investment Strategist

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...
  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • FX: Risk-on currencies to surge against havens

    Quarterly Outlook

    FX: Risk-on currencies to surge against havens

    Charu Chanana

    Chief Investment Strategist

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo...
  • Equities: Are we blowing bubbles again

    Quarterly Outlook

    Equities: Are we blowing bubbles again

    Peter Garnry

    Chief Investment Strategist

    Explore key trends and opportunities in European equities and electrification theme as market dynami...
  • Macro: Sandcastle economics

    Quarterly Outlook

    Macro: Sandcastle economics

    Peter Garnry

    Chief Investment Strategist

    Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p...
  • Bonds: What to do until inflation stabilises

    Quarterly Outlook

    Bonds: What to do until inflation stabilises

    Althea Spinozzi

    Head of Fixed Income Strategy

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ...
  • Commodities: Energy and grains in focus as metals pause

    Quarterly Outlook

    Commodities: Energy and grains in focus as metals pause

    Ole Hansen

    Head of Commodity Strategy

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.