Fortune : A top exec at the largest metaverse platform ‘never’ wants to sell to

Fortune : A top exec at the largest metaverse platform ‘never’ wants to sell to Meta - https://bit.ly/3gjssdX

Facebook rebranded to Meta to reflect its metaverse ambitions, but if it ever planned to buy one of the most popular digital worlds, the Sandbox, it might want to think again, Sandbox’s chief operating officer said on Thursday.

During a live interview with CoinDesk Thursday morning, Sébastien Borget, COO of the Sandbox, shot down rumors circulating on Twitter that the social media giant was thinking of acquiring his metaverse platform.

“I hope it will never be happening,” Borget said of Meta potentially acquiring the Sandbox, one of the most popular metaverse platforms, which is owned by Animoca Brands.

“I don’t see any compatibility here with what we are doing,” he told CoinDesk.

While Borget said the Sandbox has been focusing on giving players true ownership of items like land within its game through non-fungible tokens, Meta has taken a different approach.

“They are keeping a mindset where they want as a platform to control the ownership of the user identities, the data of their users, and digital content produced by the users,” Borget told CoinDesk on Thursday.

Meta lost $10.2 billion in 2021 at Reality Labs, its metaverse division, CEO Mark Zuckerberg said on an earnings call. On Thursday, Meta’s stock dropped nearly 25%, shaving almost $230 billion from its market capitalization.

Borget also said an acquisition would pose a logistical problem for Meta because many of the assets on the platform are owned by individuals through NFTs. He said to acquire the Sandbox, Meta would have to buy out all the individuals who own land on the platform.

Apart from ownership of in-game items, Borget said, the Sandbox is meant to be fun. It’s an open world where users can play games, build avatars or structures, and earn revenue through the play-to-earn model that rewards players with cryptocurrency.

On the other hand, what Meta is building in the metaverse is a world apart, Borget said.

“It seems pretty boring,” he said.

>>> US After Hours Summary: NAP +57.2%, BILL +28.2%, PINS +19.4%, AMZN +14.2%, SKX +8.4%, SYNA +6.9% up sharply on earnings; CLX -8.3%, SKYW -6.5%, MWA -4.7%, F -4.2% lower on earnings


After Hours Summary: SNAP +57.2%, BILL +28.2%, PINS +19.4%, AMZN +14.2%, SKX +8.4%, SYNA +6.9% up sharply on earnings; CLX -8.3%, SKYW -6.5%, MWA -4.7%, F -4.2% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: SNAP +57.2%, BILL +28.2%, PINS +19.4%, AMZN +14.2% (also increases price for Prime membership), U +13.4%, EGAN +10%, SKX +8.4%, LESL +7.3%, NWSA +6.9%, SYNA +6.9%, PCTY +6%, ENVA +5.6%, VIAV +5.2%, GPRO +4.4% (also announces $100 mln share buyback authorization), FTNT +3.4%, LGF.A +3.4%, WERN +3.2%, PFSI +2.1%, DECK +1.6%, NLOK +0.9%, BECN +0.7%, PRU +0.4%, BYD +0.2%, CUZ +0.1%, SWKS +0.1%, SXI +0.1%

Companies trading higher in after hours in reaction to news: NVAX +5.1% (receives provisional approval for NVX-CoV2373 in New Zealand), HLIT +4.5% (approves $100 mln share repurchase program), PENN +3% (Score Digital achieves registration as internet gaming operator in Ontario ), TSLA +1.5% (to construct cathode building at Texas Gigafactory, according to Reuters), AXDX +1.4% (stock offering), UNP +1.1% (approves 100 mln share repurchase program), VTRS +1.1% (receives FDA approval for ANDA for Cyclosporine Ophthalmic Emulsion), CBOE +0.3% (reports trading volume for January), BALY +0.3% (forms special committee to evaluate Standard General acquisition proposal), COST +0.3% (names new COO), CWT +0.1% (receives state approval to acquire assets of Valencia Mesa), VLRS +0.1% (reports January traffic)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: CLX -8.3%, SKYW -6.5%, MWA -4.7%, F -4.2%, OTEX -3.5% (also co and Google Cloud to collaborate on next generation content services), MCHP -3.4% (also increases dividend), DLB -2.6% (also acquires Millicast), NOV -1%, ATVI -0.6%, RGA -0.6%, WWE -0.4%, AVTR -0.2%, BHE -0.2%, POST -0.1%

Companies trading lower in after hours in reaction to news: DOGZ -1.3% (files for $250 mln mixed securities shelf offering), OCFC -0.7% (to acquire majority interest in Trident Abstract Title Agency)

>>> Notable earnings/guidance movers: SNAP +53%, BILL +31.1%, PINS +28.6%, AMZN

Notable earnings/guidance movers: SNAP +53%, BILL +31.1%, PINS +28.6%, AMZN +18%, U +15.5%, SKX +9% on upside; CLX -8.4%, F -3.5%, OTEX -3.5%, DLB -2.6% on downside
  • Earnings/guidance gainers: SNAP +53%, BILL +31.1%, PINS +28.6%, AMZN +18%, U +15.5%, EGAN +12.3%, SKX +9%, LESL +8.6%, SYNA +8%, VIAV +5.8%, ENVA +5.6%, PCTY +5.5%, GPRO +5.2%, FTNT +1.9%
  • Earnings/guidance losers: CLX -8.4%, F -3.5%, OTEX -3.5%, DLB -2.6%, SWKS -1.1%

>>> Amazon: Seeing really big pop on earnings, +17% after hours; here is our qui

Amazon: Seeing really big pop on earnings, +17% after hours; here is our quick take
Amazon is making a Prime move following its Q4 report, despite Q1 revenue and operating income guidance being a bit light.
We think the main reasons the stock is up:
  • First, a big number from AWS looks like the main reason. With +39.5% growth, that's a modest acceleration from +39% growth in Q3, +37% growth in Q2, +32% in Q1 and +28% in 4Q20. Remember that MSFT saw Azure revenue growth dip to +46% in DecQ when it reported last week, which was a decent size decline from around +50% the past few quarters. Maybe AWS is taking share; either way, was really impressive. It's helping investors overlook the shortfall on online sales.
  • Second, we do not have a clean adjusted EPS number from AMZN, but the Q4 operating income number at $3.46 bln was above the high end of prior guidance of $0-3 bln and above consensus of $2.57 bln. So that is a decent proxy for profitability. AMZN really stressed last quarter that inflation, especially higher wages, would take a bite out of Q4, but it turned out less bad than expected. And this was no gimme, after missing consensus in Q3.
  • Third, we also think investors love the Prime subscription price increase; it shows that management is confident in its business and they know subscribers will pay it.

>>> US Close Dow -1.45% S&P -2.44% Nasdaq -3.74% Russell -1.90% VIX 24.58 +11.4%

Closing Stock Market Summary

The S&P 500 fell 2.4% on Thursday, pressured by disappointing earnings results and guidance from Meta Platforms (FB 237.76, -85.24, -26.4%) and an increase in interest rates. The Nasdaq Composite dropped 3.7%, but the Dow Jones Industrial Average (-1.5%) and Russell 2000 (-1.9%) didn't fare as bad. 

Meta's 26% drop reverberated throughout the growth-stock space, especially weighing on shares of companies scheduled to report earnings after the close like Amazon.com (AMZN 2776.91, -235.34, -7.8%) and Snap (SNAP 24.50, -7.57, -23.6%). The Russell 3000 Growth Index fell 3.7%, versus a 1.1% decline in the Russell 3000 Value Index. 

There weren't any convincing efforts to buy the dip, and the longer this went on, the more it seemed to weigh on overall risk sentiment. Ten of the 11 S&P 500 sectors closed lower in a steady decline. 

The S&P 500 communication services (-6.8%), consumer discretionary (-3.6%), and information technology (-3.1%) sectors fell between 3-7% amid weakness in the mega-cap stocks. The consumer staples sector (+0.01%) closed fractionally higher due to its defensive qualities. 

Besides Meta, Qualcomm (QCOM 179.10, -9.10, -4.8%), Merck (MRK 79.01, -3.00, -3.7%), Honeywell (HON 191.75, -15.80, -7.6%), and Spotify (SPOT 159.76, -32.16, -16.8%) were other laggards following their earnings reports, while T-Mobile US (TMUS 120.78, +11.20, +10.2%) stood out with a 10% gain. 

Interest rates moved higher following policy meetings from the European Central Bank (ECB) and the Bank of England. ECB President Lagarde expressed concerns about inflation and said she couldn't rule out a rate hike this year. The Bank of England raised its key lending rate by 25 basis points for the second consecutive meeting, and four of the nine voting members preferred a 50-bps increase. 

The 2-yr yield rose four basis points to 1.19%, and the 10-yr yield rose six basis points to 1.83%. The U.S. Dollar Index fell 0.6% to 95.38 amid a stronger euro, which keyed off rate-hike expectations due to inflationary pressures. Crude futures topping $90 per barrel ($90.22, +2.05, +2.3%) fueled the inflation angst.

Today's losses tested the resolve of dip-buyers from the previous days, but investors could at least take solace in the S&P 500 closing above its 200-day moving average (4442). The Nasdaq 100, however, fell back below its 200-day moving average (15032). 

Reviewing Thursday's economic data:

  • The ISM Non-Manufacturing Index for January decreased to 59.9% (consensus 60.0%) from an upwardly revised 62.3% (from 60.0%) in December. The dividing line between expansion and contraction is 50.0%. The January reading marks the 20th straight month of growth for the services sector, albeit at a slightly slower pace.
    • The key takeaway from the report is that growth moderated some for the non-manufacturing sector in January with Omicron and supply-related pressures seen in the slippage of indexes for production and employment, and the uptick in the supplier deliveries index, which is indicative of a worsening in the pace of deliveries.
  • Initial jobless claims for the week ending January 29 decreased by 23,000 to 238,000 (consensus 245,000) while continuing claims for the week ending January 22 decreased by 44,000 to 1.628 million.
    • The key takeaway from the report is the turn lower in initial claims, which suggests there has been an easing of the Omicron impact that contributed to the higher initial claims levels in recent weeks.
  • Q4 nonfarm business sector labor productivity increased 6.6% (Briefing.com consensus 2.7%) with output increasing 9.2% and hours worked increasing 2.4%. Unit labor costs increased 0.3% as hourly compensation increased 6.9% versus the 6.6% increase in productivity.
    • The key takeaway is that the healthy increase in productivity in Q4 helped keep unit labor costs in check, but it isn't necessarily resonating as a staying factor given the steady acknowledgment of rising labor costs heard from companies reporting Q4 earnings.
  • Factory orders for manufactured goods decreased 0.4% m/m in December (consensus -0.4%) following an upwardly revised 1.8% increase (from 1.6%) in November. Shipments of manufactured goods jumped 0.4% after increasing 0.7% in November.
    • The key takeaway from the report is the uptick in order growth for nondefense capital goods, excluding aircraft -- a proxy for business spending.
  • The final IHS Markit Services PMI for January increased to 51.2 from 50.9 in the preliminary reading.

Looking ahead, investors will receive the Employment Situation report for January on Friday.

  • Dow Jones Industrial Average -3.4% YTD
  • S&P 500 -6.1% YTD
  • Nasdaq Composite -11.3% YTD
  • Russell 2000 -11.3% YTD

>>> Activision Blizzard beats by $0.13, misses on revs; last month Microsoft (MS

Activision Blizzard beats by $0.13, misses on revs; last month Microsoft (MSFT) announced it will acquire ATVI for $95/share (78.95 -0.30)
  • Reports Q4 (Dec) earnings of $0.72 per share, $0.13 better than the S&P Capital IQ Consensus of $0.59; revenues fell 18.4% year/year to $2.49 bln vs the $2.83 bln S&P Capital IQ Consensus.
  • As announced on January 18, 2022, Microsoft (MSFT) plans to acquire Activision Blizzard for $95.00 per share, in an all-cash transaction valued at $68.7 billion, inclusive of Activision Blizzard's net cash. The transaction is subject to customary closing conditions and completion of regulatory review and Activision Blizzard's stockholder approval. The transaction, which is expected to close in Microsoft's fiscal year ending June 30 2023, has been approved by the boards of directors of both Activision Blizzard and Microsoft.
Note: EPS is GAAP and revenue is net bookings.

>>> Amazon reports Q4 (Dec) results, revs in-line; guides Q1 revs below consensu

Amazon reports Q4 (Dec) results, revs in-line; guides Q1 revs below consensus; AWS sees nice growth; co to raise Prime subscription fees (2776.91 -235.34)
  • Reports Q4 (Dec) earnings of $27.75 per share, this is NOT comparable to the S&P Capital IQ Consensus of $3.54; revenues rose 9.4% year/year to $137.41 bln vs the $137.63 bln S&P Capital IQ Consensus.
    • Note: the EPS number includes a pre-tax valuation gain of $11.8 bln related to its investment in Rivian Automotive (RIVN), which completed its IPO in November. We are not seeing a clean adjusted EPS number.
    • Operating income fell 50% yr/yr to $3.46 bln, above prior guidance of $0-3 bln.
    • AWS segment sales rose 39.5% yr/yr to $17.78 bln, a modest acceleration from 39% growth in Q3, +37% growth in Q2 , +32% in Q1 and +28% in 4Q20.
    • Co will increase the price of a Prime membership in the US, with the monthly fee going from $12.99 to $14.99, and the annual membership from $119 to $139. This is its first price increase since 2018. Note: NY Post reported this week, this may happen.
    • "As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into [Q1] due to Omicron."
  • Co issues downside guidance for Q1, sees Q1 revs of $112-117 bln vs. $120.52 bln S&P Capital IQ Consensus.
    • Co guides to Q1 operating income of $3-6 bln, which is below consensus of $6.35 bln.

>>> Ford Motor misses by $0.15, reports revs in-line; FY21 adjusted EBIT at midp

Ford Motor misses by $0.15, reports revs in-line; FY21 adjusted EBIT at midpoint of guidance range; sees FY22 adjusted EBIT of $11.5-12.5 bln
  • Reports Q4 (Dec) earnings of $0.26 per share, excluding non-recurring items, $0.15 worse than the S&P Capital IQ Consensus of $0.41; revenues (automotive revenue) rose 6.3% year/year to $35.3 bln vs the $35.63 bln S&P Capital IQ Consensus.
  • FY21 company adjusted EBIT of $10.0 billion at midpoint of $9.6 billion to $10.6 billion guidance range, after reclassifying Q1 Rivian gain.
  • FY22 Outlook:
    • Lawler said Ford expects full-year 2022 adjusted EBIT to be even stronger -- $11.5 billion to $12.5 billion, an increase of 15% to 25% over 2021.
    • The high end of the adjusted EBIT range equates to a margin of 8% which, if achieved, would be one year earlier than the company's previous target.
    • Adjusted free cash flow for the year is expected to be $5.5 billion to $6.5 billion.
  • Underlying assumptions for 2022 include: Significantly higher profits in North America, along with collective profitability in the rest of the world as the company benefits from its extensive global redesign. Continued variability in supplies of key components, with full-year vehicle wholesales nonetheless being up about 10% to 15%, with a high single- to low double-digit decline in Q1, reflecting supplier shortages related to COVID shutdowns and semiconductors.
  • "Financial performance is obviously critical," said President and CEO Jim Farley. "We're also proud that customers see how Ford is taking EVs mainstream, and have already ordered or reserved more than 275,000 all-electric Mustang Mach-E SUVs, F-150 Lightning pickups and E-Transit commercial vehicles -- and we're breaking constraints to deliver every one of them as fast as we can." Customers made Ford the No. 2 seller of electric vehicles in the U.S. in 2021, what Farley called "an important early step toward eventually being the true EV leader." Earlier, he said that the company will double worldwide EV manufacturing capacity to at least 600,000 by 2023 -- and for fully electric vehicles to represent at least 40% of its product mix by 2030."

>>> Fortinet beats by $0.08, reports revs in-line; guides Q1 EPS below consensus

Fortinet beats by $0.08, reports revs in-line; guides Q1 EPS below consensus, revs in-line; guides FY22 EPS above consensus, revs above consensus
  • Reports Q4 (Dec) earnings of $1.23 per share, excluding non-recurring items, $0.08 better than the S&P Capital IQ Consensus of $1.15; revenues rose 28.8% year/year to $963.6 mln vs the $961.56 mln S&P Capital IQ Consensus.
    • Product revs increased 31.4% yr/yr to $378.9 mln.
    • Service revs increased 27.2% yr/yr to 584.7 mln.
    • Total billings increased 35.9% yr/yr to $1.31 bln.
    • Total bookings increased 48.7% yr/yr to $1.43 bln.
  • Co issues guidance for Q1, sees EPS of $0.75-0.80, excluding non-recurring items, vs. $0.94 S&P Capital IQ Consensus; sees Q1 revs of $865-895 mln vs. $873.32 mln S&P Capital IQ Consensus.
  • Co issues upside guidance for FY22, sees EPS of $4.85-5.00, excluding non-recurring items, vs. $4.60 S&P Capital IQ Consensus; sees FY22 revs of $4.275-4.325 bln vs. $3.98 bln S&P Capital IQ Consensus

>>> Clorox misses by $0.19, beats on revs; guides FY22 EPS below consensus

Clorox misses by $0.19, beats on revs; guides FY22 EPS below consensus
  • Reports Q2 (Dec) earnings of $0.66 per share, excluding non-recurring items, $0.19 worse than the S&P Capital IQ Consensus of $0.85; revenues fell 8.2% year/year to $1.69 bln vs the $1.66 bln S&P Capital IQ Consensus.
    • The decline in net sales reflects a 10-point decline in volume and 2 points of favorable price mix. Foreign exchange was flat, and organic sales for the quarter declined 8%.
  • "Although we expect cost pressures will continue through fiscal year 2022, we're confident we have the right strategy and are taking the right actions to strengthen our competitive position, build a stronger, more resilient company, and create long-term shareholder value."
  • Co issues downside guidance for FY22, sees EPS of $4.25-4.50, excluding non-recurring items, vs. $5.44 S&P Capital IQ Consensus.
    • Sees net sales decline of 1% to 4% (organic sales decline of 1% to 4%). Reflects a sales decline of 7% in the first half of fiscal year 2022, or an increase of 19% on a two-year stack basis, compared to 27% sales growth in the first half of fiscal year 2021. By the fourth quarter, the company expects sales to return to its long-term sales growth target of 3% to 5%.
    • Gross margin decline of about 750 basis points, primarily due to higher than previously anticipated commodity and manufacturing & logistics costs, with the assumption of a return to gross margin expansion in the fourth quarter.