Big Tech Starts the Party

💸 Earnings are coming in hot and cold, with Amazon, Reddit, Apple, and Airbnb reporting yesterday after the close.

May 02, 2025

Silver banana goes to…




In this issue of the peel:

  • 📈 Stocks received a nice bump to begin the month by positive earnings from Meta and Microsoft.

  • 💸 Earnings are coming in hot and cold, with Amazon, Reddit, Apple, and Airbnb reporting yesterday after the close.

  • 📈Eurozone GDP expanded to start the year.

Market Snapshot

Banana Bits

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Macro Monkey Says

Eurozone expanding

The Eurozone economy saw a 0.4% growth in Q1 2025, surpassing expectations and marking a positive start to the year. This uptick was driven by strong performances in countries like Ireland, which saw a 3.2% surge in GDP, and Spain, benefiting from strong tourism and exports. 

However, the overall growth was tempered by modest expansions in major economies such as Germany (0.2%), France (0.1%), and Italy (0.3%).

Germany's slight growth helped it avoid a technical recession after a contraction in the previous quarter. The country's economy was bolstered by increased household consumption and investment. 

Nonetheless, Germany remains the only G7 nation without economic growth over the past two years, and concerns persist about its vulnerability to external shocks, particularly from international trade tensions. 

The positive momentum in the Eurozone faces headwinds due to recent U.S. trade policies. President Trump's announcement of new tariffs, including a 20% levy on EU goods and a 25% duty on specific items like cars and steel, has introduced uncertainty. 

These measures are expected to impact export-dependent economies within the Eurozone, potentially dampening business confidence and investment.​

In response to these challenges, the ECB has continued its accommodative monetary policy stance, cutting interest rates to support economic activity. Additionally, Germany has approved a substantial €500 billion investment fund to stimulate growth through infrastructure and defense spending. 

However, the effectiveness of these measures will depend on their timely implementation and the broader global economic environment.

The Takeaway?

The Eurozone's 0.4% GDP growth in Q1 2025 indicates a modest recovery, with notable contributions from Ireland and Spain.​ Germany narrowly avoided a recession with 0.2% growth, but its economic outlook remains cautious amid global trade uncertainties.​  

New U.S. tariffs pose risks to the Eurozone's export-driven economies, potentially affecting future growth prospects.​The ECB's rate cuts and Germany's investment initiatives aim to counteract these challenges, but their success will depend on various factors, including global economic trends and domestic policy execution.​

Career Corner

Question

"How would you value a cow?"

I could DCF, precedents, and comps this, but how do you justify to the interviewer that you choose one methodology over another (or do you mention that you would use an array of valuation methodologies to produce a range)?

You could DCF a cow with beef as the terminal value and milk as the future cash flows, but how would you actually wrap up the answer cleanly to the interviewer?

Answer

Any of these answers work. Explain and weigh the pros and cons, and pick one. The question is designed to test how you think, and if you fumble with a slightly out there question, not looking for one specific answer out of the 3.

Also, a good opportunity to show a little personality/humor given the prompt… A way to differentiate yourself from other candidates is how you talk about the methods, which can convince you that you’re “in on the joke.”

There’s a trope about MF PE modeling that they get so granular they do DCFs to determine the amount of coffee offices should be ordering… This type of question in the abstract has that kind of flavor.

Head Mentor, WSO Academy

What's Ripe

Microsoft (MSFT) 7.6%

  • Just when you think the tech giant can’t grow any more, Microsoft increased revenue by $9.1 billion, or 16%—an impressive growth rate for an already mature, scaled company. 

  • Growth was driven by all of their segments, from Intelligent Cloud and Azure to Microsoft 365. Just when it looked like big tech stocks were overvalued, investors were back picking up shares wherever they could find them.

Meta (META) 4.2%

  • Meta shrugged off tariff fears and posted a strong “beat and raise” quarter. Advertising revenue blew past estimates, and total revenue grew 16% to $42.3 billion. 

  • Zuck warned of “macroeconomic uncertainty” ahead, and the company has seen some reduced spending in the U.S. from Asia-based e-commerce exporters. But investors are kicking that can down the road and buying shares today.

What's Rotten

Confluent (CFLT) 18.4%

  • Confluent was surprised by the upside with revenue beating expectations, but the stock still got hit on sales guidance, which missed analysts’ expectations by a lot.  

  • Subscription revenue was strong, growing 26% to $261 million, while Confluent Cloud revenue increased 34% to $143 million, reflecting robust demand for its data streaming services. 

Coca-Cola Consolidated (COKE) 12.0%

  • Coca-Cola consolidated, not to be confused with Coca-Cola (ticker: KO), is the largest independent Coke bottler in the U.S. 

  • Basically, Coca-Cola set up an “independent” entity that distributes its products. So, they’re technically the same company while simultaneously being different. 

  • Now that we’ve got that explanation out of the way, the company reported earnings that highlight weaker consumer demand as sales, gross profit, and net income all decreased year-over-year.

Thought Banana

Earnings Bonanza

It’s that time of the year again. Earnings season is in full force, and this week was the main attraction, with the largest market-moving tech names reporting. We discussed Meta and Microsoft yesterday. Now, let’s get into a few more.

Apple

Apple’s report was a mixed bag. Apple reported revenue of $95.36 billion for Q2 2025, slightly surpassing expectations. Product sales, including the new iPhone 16e, contributed $68.71 billion, but services revenue fell short at $26.65 billion. 

Challenges in Greater China and concerns over tariffs impacted performance. Additionally, a federal judge found Apple in violation of a 2021 court order regarding App Store practices, referring the company for possible criminal prosecution.

Reddit

Reddit's first-quarter earnings exceeded expectations, with earnings of 13 cents per share and revenue of $392.4 million. Daily active users increased by 31% year-over-year to 108.1 million. 

The company also provided a bullish Q2 forecast, expecting $420 million in revenue, well above analysts’ expectations.​

Airbnb

Airbnb's Q1 2025 earnings showed a 14% increase in revenue to $2.14 billion. The company reported a net income of $264 million, up from $117 million a year earlier. Nights and experiences booked grew by 9% year-over-year to 132.6 million. Airbnb also announced a $2.5 billion share repurchase program.

Amazon

Amazon's Q1 earnings beat expectations, with revenue of $155.7 billion and earnings of $1.59 per share. The company's advertising segment grew 19%, but its cloud division, AWS, reported revenue of $29.3 billion, slightly below expectations. 

Amazon issued mixed guidance for Q2, forecasting $161.5 billion in sales but only $15.3 billion in operating income, below analyst expectations. Tariffs on Chinese imports and concerns over consumer spending continue to pose challenges.

The Takeaway?

Given how much weight these individual names make up of the S&P and NASDAQ indexes, their earnings are extremely important. One good or bad report can move the market significantly, which has a monumental impact on your personal portfolio.

The Big Question: Are strong user numbers and revenue growth enough to offset regulatory heat and geopolitical headwinds?

Banana Brain Teaser

Previous

If x(2x + 1) = 0 and (x + 1/2)(2x - 3) = 0, then x = ?

Answer: -1/2

Today

M, N, and O were paid a total of $780 for waxing the floors at their school. Each was paid in proportion to the number of hours he or she worked. If M worked 15 hours, N worked 20 hours, and O worked 30 hours, how much was M paid?

Send your guesses to [email protected]

❝

Wall Street makes its money on activity, you make your money on inactivity.

Warren Buffett

How Would You Rate Today's Peel?


Happy Investing,
Chris, Vyom, Ankit & Patrick