FB Gets Earnings Love and Starbucks Beats Dunkin's Stock

Happy #ThrowbackThursday. For the first time since 2001, the Dow (DJINDICES: ^DJI  ) finished flat, exactly where it started the day. Meanwhile, the S&P 500 rose three points for its seventh gain in eight days. Mazel tov.

1. Facebook revenues boom with mobile domination
Once upon a time, Facebook  (NASDAQ: FB  )  had a humiliating IPO and was making a cute $53 million a year in profit. On Wednesday, after the New York stock markets closed (Zuckerberg follows Pacific Coast time), Facebook announced first-quarter earnings of $642 million. Facebook is growing into a fully grown, mature company to be reckoned with -- and the markets boosted the stock right after the bell well over 4% higher (but Zuck still dresses like a 21-year-old dropout).
 
Facebook hit a billion mobile monthly active users. Revenues grew a whopping 72%, to more than $2.5 billion. It's all driven by mobile ads, which now make up 59% of overall revenues.
 
Why did Facebook stock end down 0.8%? The MarketSnacks team just asked Jeeves that question, and there's still no good answer. One factor could be the announcement of the current CFO's departure this June, but mostly, Wall Street had an episode of craziness -- the stock price crossed from green to red seven times.
 
2. Starbucks' earnings performance beats Dunkin'
There's nothing small or "tall" about these numbers. Ol' Starbucks' (NASDAQ: SBUX  ) earnings report matched Wall Street's expectations, with a healthy $3.9 billion in revenues during the first three months of 2014 -- a 9% rise from the same period last year.

In the world of more mediocre coffee, things weren't as pretty. While Starbucks' same-store sales increased by 6% for the quarter, Dunkin's only gained 1.2%. The discrepancy sent Starbucks stock up 1% and Dunkin's down 1.9% Thursday.

So why the tale of two lattes? The majority of Dunkin's stores are located in the cold winter-battered northeast, where Red Sox fans are apparently too soft to leave home and spend money on coffee. Starbucks never mentioned U.S. weather in its earnings report -- the company's sales are saved by its international presence. And it plans on opening 1,500 new stores in 2014, with half in Asia.
 
3. GM's profits crashed by 3+ million car recalls
This is going to be bad. General Motors (NYSE: GM  ) , the biggest car company in America, had to announce first-quarter earnings. It was bad... profits fell to $125 million compared to $865 million last year. If you need to know why GM's profit fell so far, you probably don't watch the Daily Show or late night comedy or the news. Hint: It involves a 10-year cover-up of broken GM cars...
 
GM Recalled more than 3 million cars, and it cost a lot of money. Wall Street actually predicted this recall disaster would cause an even bigger profit drop. The minute news came out in February that GM cars were shutting off in the middle of the highway because of heavy swinging key chains, investors began selling GM stock. It's down 3% since mid-February, which is about $1.6 billion of value when you look at the Market Capitalization. But GM only wrote off $1.3 billion in total expenses for the recall, so Wall Street was actually pleasantly surprised.
 
Besides the bad news, the business was actually solid. If you forget about the huge recall expenses, GM's result really smoked the Street's expectations like a Vin Diesel-driven GTO muscle car. Wall Street analysts ignored the huge 83% profit drop headline, and bought the stock up 3% early before it eventually fell just 0.6% Thursday. GM's new, not horribly dangerous cars, are selling pretty well right now.
 
Friday:
  • Reuters/UMich Consumer Sentiment Poll
  • First-Quarter Earnings: Burger King, Ford
 
As originally published on MarketSnacks.com
 

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