The Winners and Losers of Earnings Season: Q3 Edition

There may be nothing—not congressional hearings, baffling operating system bugs, or antitrust murmurings—that can stop the financial momentum of America’s largest tech companies. Even as increasingly loud alarm bells are sounding over the amount of power consolidating among the five biggest tech firms, users and revenues continue to roll in. We recently witnessed something of a political reckoning for portions of Silicon Valley, especially Google and Facebook. But it was a wildly profitable period, as well.

Not everyone can be a winner, though. With the giants now hoovering up the lion’s share of online ad revenue and user engagement time, smaller foes like Snapchat and Twitter are struggling to prove they have a viable future. For them, the moment calls for radical reinvention—Twitter just doubled its character limit for the first time, and Snapchat promised a “disruptive” redesign of its app. Meanwhile, the companies they’re chasing seem largely content to continue business as usual, even if that business threatens the social fabric.

But at least the Nasdaq is killing it these days. Welcome to another round of earnings season winners and losers!

Losers

Snap

How maddening it must be for Snap CEO Evan Spiegel to watch Facebook, which owns Instagram, shamelessly pilfer each one of his app’s key selling points, then make them even more popular than they ever were on Snapchat. Is there any doubt that Mark Zuckerberg sends Spiegel a “retire, bitch” snap every night before bed, probably using the puking rainbow filter? Zuck’s torment is weighing heavily on Snap’s financials. The company missed analysts’ estimates for revenue and user growth in the third quarter, while also racking up $443 million in losses. Snap also ate a $39.9 million loss on unsold Spectacles, confirmation that its much-hyped augmented-reality glasses failed to find an audience. Shares tumbled more than 20 percent on the poor earnings report.

Spiegel promised a redesigned Snapchat app that will apparently make the user interface comprehensible to people besides Cool Teens (I spent five minutes trying to remember how to use face filters in order to write this blurb). But the road ahead for Snap will be tough, considering any particularly creative UX innovations are likely to wind up on Instagram sooner rather than later.

Tesla

It was less than four months ago that Elon Musk was dazzling audiences at a flashy launch event for the Model 3, the sedan that’s supposed to propel Tesla into the mainstream. But production of the vehicle has been disappointingly slow, with the company producing just 222 of the vehicles during the most recent quarter rather than an expected 1,500. A recent round of layoffs attracted more bad press for the automaker, and prompted Musk to hit “low integrity” journalists with the metaphorical shame bell. Meanwhile Tesla’s quarterly loss of $619 million was bigger than analysts expected, sending the company’s share price down. During his earnings call, Musk compared Tesla’s current woes with the Model 3 to the eighth circle of Hell in Dante’s Inferno. He said he was glad to have escaped the ninth circle, but the company still has a long way to go to reach the surface.

Winners

Apple

After a shaky 2016 that included the company’s first revenue decline since the iPod era, Apple has had a stellar 2017 that continued in the most recent quarter. iPhone unit sales of 46.7 million beat analysts’ projections, indicating that the new iPhone 8 and 8 Plus were immediate hits (the iPhone X was released after the earnings period). Revenue and profits also both beat analysts’ estimates. And critically, sales in China grew dramatically, indicating that Apple may once again be making inroads in a challenging foreign market. No wonder the company’s valuation eclipsed $900 billion following all the good news.

Facebook

On the same day that Facebook’s general counsel was answering to Congress about the company’s role in spreading Russian propaganda during the 2016 presidential election, Mark Zuckerberg was talking to investors about Facebook’s stellar earnings. Revenue reached $10.3 billion, profits reached $4.7 billion, and monthly active users ticked up to 2.06 billion. Aware of the criticism his company is facing in Washington, Zuckerberg vowed that the company’s investments in improved security would be big enough to impact profitability going forward. Facebook also plans to make continued big investments in video, which Zuckerberg sees as critical to the company’s future success.

Alphabet

Another quarter, another solid earnings report for Google parent company Alphabet. The company’s revenue of $28 billion and profits of $6.7 billion both exceeded analysts’ expectations. The financial engine of Alphabet continues to be Google, and the financial engine of Google continues to be search advertising. The company seems to have figured out how to make mobile ads pay, citing them as a particularly strong growth area during the quarter. That means Alphabet still has plenty of time to tinker around with its moonshots such as driverless cars, which are lumped together in “Other Bets” and lost $812 million during the quarter.

Amazon

Amazon has turned into a consistently profitable tech giant thanks to its booming cloud business. The company’s $256 million profit beat analysts’ estimates, as did the $43.7 billion in revenue. Amazon Web Services alone had an operating income of $1.2 billion, making up for massive losses in Amazon’s international business. The company also noted that its latest big-ticket acquisition, Whole Foods, pulled in $1.3 billion in revenue. The strong earnings report helped CEO Jeff Bezos reclaim the title of richest person in the world.

Netflix

Netflix’s stock lives and dies by the company’s subscription numbers, and this quarter brought great news on that front. The streaming service added 5.3 million new subscribers, beating analysts’ estimates of 4.5 million. Netflix is becoming increasingly bold in its bet on original programming, with plans to spend as much as $8 billion on content (original and licensed) next year. Some analysts continue to wonder whether Netflix’s breakneck spending will eventually catch up to it—while the company is technically profitable, it also burns through hundreds of millions of dollars of cash every quarter. But moves like continued price increases for subscribers are likely to keep shareholders confident that the Netflix bet will ultimately pay off.