Breakfast Briefing

Better than expected profits for Facebook

May 4, 2017

Facebook - the social media giant, published its latest results last night. Despite surging profits, these came with something of a warning. Advertising revenue growth is tipped to fall throughout the remainder of the year. The company is now hunting out alternative revenue raising methods with the timeline for this reaching a saturation point. Shares did fall a little as a result, but on the basis they reached all time highs during yesterday’s session before the numbers were posted, investors still have something to cheer.

Tesla - may have seen its market capitalisation rise to the top of the US auto makers, but last night we saw more glum news from the company. Production rates and revenues may be on the up, but losses are widening. General Motors threw down the gauntlet last week with a claim that it would be the first company to make electric cars profitably - something that will undoubtedly irk Tesla’s shareholders. However, a move into the mass market may be the saving grace for Elon Musk’s company.

Next - the first quarter of the year will hopefully be the toughest as the company battles against a weak pound and faltering consumer confidence. Sales have been under pressure in recent months with goods sold at full price down by 3%, leading the company to trim its full year profit guidance to the market. Online sales are however doing well and investors have been offered an additional special dividend of 45p/share in a bid to keep them sweet - although with shares off by almost 5%, this may yet prove to be in vain.

G4S - we noted the company’s proposed tie up with Lloyds Bank yesterday, with the aim being to diversify away from government contracts and offer mobile banking services. However, this morning's results show good progress is already being made by the business. Revenues for the first quarter are up 9% on the 2016 figure and shares are marching higher as a result. The company has had a rough ride, embroiled in a number of major issues including its failure to deliver the security for the 2012 Olympics but has a corner now been turned? With shares marching higher, a return to the FTSE-100 could be imminent.

Libya - has been in a civil war for the last three years, but The Times reports that a tentative power sharing deal is close to being struck. As a major oil producer, a peaceful accord in the country would have the potential to increase production of oil and in turn drive down prices - not necessarily the news the oil giants want, but for the citizens of Libya, this would be a significant breakthrough.