This week’s stories look at Facebook reporting strong earnings, royal commission outcomes, and Australia’s hottest month to date. (2:48 min read)

This information does not take into account your personal objectives, financial situation or needs. You should consider if the relevant investment is appropriate having regard to your own objectives, financial situation and needs.

 

1. Facebook bounces back with stellar earnings

It has been a difficult 12 months for Facebook.

Various privacy scandals have dragged down both its reputation and stock price. However, the company’s recent earnings announcement indicate the social media giant might be back on track.

What does it mean if you’re invested in Facebook?

Facebook reported excellent fourth quarter results that surpassed market expectations.

There was strong revenue growth despite slowing user growth, which indicates advertisers continue to spend more money on the platform.

CEO Mark Zuckerberg said himself the company has started to turn the corner. Unsurprisingly, the stock price surged following the positive earnings season news.

What does it mean if you’re invested with AtlasTrend?

Facebook is an investment in one of AtlasTrend’s managed funds.

We took some profit on some of the position when the stock reached US$207 per share, and subsequently added back to the position when the stock was sold down – particularly following the company’s privacy controversies.

We believed these issues would be addressed, and wouldn’t materially impact earnings in the long term.

So far, it seems Facebook has done exactly that.

 

2. Royal commission report finally released

After months of reprimanding major financial services players ­– from banks to super funds – Kenneth Hayne (head of the banking royal commission) released the final report containing 76 recommendations for cleaning up the industry.

What does this mean if you’re invested in the local financial services sector?

The big banks seem to have escaped relatively unscathed.

Royal Commission recommendations don’t appear to materially threaten how the major banks make their money. However, it may take the banks some time to regain consumer trust given their alleged unethical behaviour.

Companies providing financial intermediary services such as mortgage brokers are the worst hit by the royal commission recommendations, which may effectively change the way the industry will operate moving forward.

What does this mean if you’re invested with AtlasTrend?

AtlasTrend’s managed funds do not have any direct investment exposure to ASX-listed financial services stocks.

As a result, the Royal Commission recommendations should not have any material impact on the value of our managed fund investments.

 

3. January was Australia’s hottest month ever

We experienced our hottest month in history last month.

Some scientists suggest this extreme heat, prolonged bushfire seasons, and drought is consistent with climate change.

The meteorological agency also warned temperatures are potentially set to rise further in the coming years.

What does this mean if you’re invested in the stock market?

59% of those surveyed in a recent Lowy Institute Poll agreed global warming is a serious and pressing problem that needs to be tackled now.

“Almost all Australians (84%) say the government should focus on renewables, even if this means we may need to invest more in infrastructure to make the system more reliable.”

Investors in carbon-heavy industries may want to pay close attention to the possibility these industries may be severely curtailed, or even shut down entirely, as climate action gains momentum.

What does this mean if you’re invested with AtlasTrend?

We believe the risks of climate change are real.

Companies helping address climate change present an excellent investment opportunity, and frankly, we owe it to current and future generations to consider this pressing issue when deploying capital.

It’s why we created the Clean Disruption Fund; so investors could gain exposure to companies helping create a more sustainable world, solving problems like climate change in the process.

 

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About Kent Kwan

Kent Kwan is a Co-Founder of AtlasTrend, an investment platform that makes it easy for anyone to learn and invest in trends impacting our world. Kent has over 17 years experience in financial markets including as Chief Investment Officer at Arowana International Limited, and roles at JP Morgan and Macquarie.