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Q3 earnings from the tech giants have pointed out why online advertising is roaring back from a pandemic recession, Morgan Stanley says, and that sets up for a strong 2021 for Facebook (FB +0.5%), Google (GOOG +0.1%, GOOGL +0.3%) and Pinterest (PINS +0.1%) in particular.
Ad beats are in part the result of consumer behavioral changes that have accelerated the desire to experiment and shift advertising spend digital’s way, the firm says.
“Big picture, we continue to view advertising as being cyclical and see faster GDP growth leading to more ad spend across more industries … as companies spend to reach the recovering/re-opening consumer.”
Overall it’s raising its ad forecast for 2020 by 8% and for 2021 by 15% – leading it to expect 11% Y/Y growth next year, and 20% in 2021.
For Facebook, Morgan Stanley is expecting a bullish 29% advertising growth in Q4 and 27% next year – but those estimates don’t account for contributions from Instagram Shops or Reels, two features that are taking new prominence front and center at Instagram.
Those two produces could add hundred of millions of dollars in ad revenue next year, Morgan Stanley says.
Google should see a recovery in travel search, while YouTube can benefit from stronger direct-response and a more stable brand ad market, it says. And as for Pinterest, at least a third of its revenue earlier this year was pure brand spend, so it should benefit as the broader brand market improves, and it will see a tailwind from automated bidding as well as other products it’s building out, including performance marketing.
Citing industry checks, KeyBanc analyst John Vinh says Qualcomm (QCOM -1.0%) has received an export license from the U.S. to ship 4G chips to Huawei, not the 5G chips suggested in media reports.
Vinh’s sources seemed skeptical that any suppliers would be able to receive a license to supply 5G chips to the banned company.
Qualcomm’s 4G win is still a slight positive that won’t provide near-term upside but could become “modestly incremental” next year, says Vinh.
QCOM is one of Vinh’s recommended stocks to gain exposure to Apple’s supply chain.
The new markets include Chicago, Dallas, Los Angeles, New York, and Washington, D.C..
Key In-Garage Delivery allows Prime customers to receive contactless package delivery inside their garage through a smart garage door opener and the Key section of Amazon’s app.
Amazon is also soft launching in-garage deliveries for Whole Foods groceries in five cities.
“Customers tell us they appreciate the convenience and peace of mind that in-garage delivery offers, and we’re happy to expand the service to thousands of additional cities,” says Pete Gerstberger, Head of Key by Amazon. “With this latest expansion, Amazon customers in thousands of big cities and small towns across the U.S. can now enjoy another Prime benefit with convenient, contactless deliveries right in their garage, all backed by the Key by Amazon Happiness Guarantee.”
Tencent (OTCPK:TCEHY): Q3 Non-GAAP EPS of RMB3.31; GAAP EPS of RMB3.96.
Revenue of RMB125.44B (+29.0% Y/Y) beats by RMB1.61B.
VAS Revenue was up 38% Y/Y to RMB69.80B vs. a RMB65.26B consensus
Adjusted EBITDA was up 26% to RMB47.85B.
Capital expenditure up 31% to RMB8.68B.
FCF was flat at RMB28.13B.
Pinduoduo (NASDAQ:PDD): Q3 Non-GAAP EPS of $0.05 beats by $0.20; GAAP EPS of -$0.10 beats by $0.14.
Revenue of $2.09B beats by $230M.
Average monthly active users were 643.4M, an increase of 50% from 429.6M in Q3 2019.
Active buyers in the twelve-month period ended September 30, were 731.3M, an increase of 36% from 536.3M in the twelve-month period ended September 30, 2019.
GMV in year ended September 30, 2020 was RMB1,457.6B ($214.7B), +73% from RMB840.2B in year ended September 30, 2019.
“Despite industry seasonality, we continued to deliver solid execution through the third quarter and generated positive cash flow from operations,” added Mr. Tony Ma, Vice President of Finance.