Stock Market Nerd – Market Headlines – January 5, 2024
Google (GOOGL) plans to cut another 30,000 (about 17% of headcount) jobs in 2024 based on GenAI automation and efficiency gains. Two things are true: First, this is very unfortunate for those involved. Regardless of how strong the job market is, getting fired is never fun. Secondly, this could impact margin ceilings for those best able to take advantage of this innovation. If you can be as productive with 150,000 people instead of 180,000, that could easily mean another $3-$4 billion flowing down the income statement to the bottom line. Google, Amazon, Microsoft, Meta, Salesforce and many, many others should enjoy this kind of GenAI-based cost optimization.
Uber (UBER) continues to get more love from the Street. Nomura cut Lyft targets based on shrinking market share (so rising Uber market share). Wedbush’s Dan Ives is also quite upbeat about Uber, but not Lyft. Best in class driver supply fees and wait times, best in class consumer network, best in class product breadth/subscription, best in class cost of capital, best in class margins and best in class balance sheet for the win. Uber is best in class. The valedictorian, if you will.
Meta Platforms (META) saw news swirl this week about Zuckerberg selling about $500 million in stock recently. What a big number. What did all of these disclosures conveniently avoid sharing? That the sales were all options being exercised and that they represent a tiny fraction of his overall equity. That context just doesn’t get as many clicks as “$500 million.”
