Linked List: January 28, 2021

Thursday, 28 January 2021

‘Best Quarter in the History of the Smartphone’ ★

Kif Leswing, CNBC:

Apple doesn’t provide unit sales for its products anymore, but according to an estimate from research firm IDC, Apple shipped 90.1 million phones during the quarter. That’s the largest number in any single quarter since IDC started tracking smartphones, analyst Francisco Jeronimo said.

90 million total units — in one quarter — puts some context to reports that Apple has dialed back production of the iPhone 12 Mini by 2 million. Even if it’s true that Apple is ordering 2 million fewer 12 Minis than they originally projected (and I don’t believe any such reports — no little birdies I’ve ever spoken to have ever given any credence whatsoever to reports like that) the 12 Mini could easily be selling well enough to justify its continuing position in the lineup. Stay strong, Macalope.

Anyway, these strong sales for the iPhone 12 lineup call for some delicious claim chowder. Matt Krantz, Investors Business Daily, 14 October, “Apple’s New iPhone 12 Gets The Worst Reception Ever”:

Did you hear the thud during Apple’s new iPhone announcement? That was the new iPhone 12 falling flat with S&P 500 investors.

I did not hear the thud.

iPhone Saw Strong Sales in China Last Quarter ★

Reuters:

Apple Inc on Wednesday reported holiday quarter sales and profits that beat Wall Street expectations, as new 5G iPhones helped push handset revenue to a new record and sparked a 57% rise in China sales.

As my friend Ben Thompson has long theorized, the Chinese market might be particularly sensitive to new iPhone designs. Chinese buyers, the theory goes, want new iPhones that look like new iPhones, so that everyone knows they have the newest iPhone. So the iPhones 12 Pro scratched an itch in that regard that the 11 and XS models did not.

Hard to believe it was just two short years ago (I kid — last year alone was 10 years long) we were seeing (not entirely unreasonable) stories with headlines like “The iPhone Has Big Problems in China — and Across the Globe”.

Apple’s Q1 by the Numbers ★

Jason Snell’s usual roundup of charts illustrating Apple’s quarterly results. One thing that sticks out is that while Mac sales were up year-over-year, they were down slightly (4%) from the July–September quarter, which, on the surface, makes no sense. How could Mac sales go down during the quarter when Apple launched the M1 Macs — Macs that were universally acclaimed and which many users were waiting for?

The answer, seemingly, is that Macs were supply-constrained during the quarter. Apple couldn’t make them fast enough. (That’s a link to a tweet from the excellent MacJournals, who also observed that, adjusted for splits, AAPL shares 20 years ago were $0.30 per share.)

Update: Neil Cybart points out that the July–September quarter is always big for the Mac because it’s back-to-school season. That’s true — a glance at Snell’s chart shows that the Mac’s annual cycle has big quarters in July-September (back to school) and October-December (holiday). But most years the holiday quarter ekes ahead as the biggest of the year. It’s clear that the COVID pandemic, with students of all ages around the world preparing for school-at-home, resulted in an unusually large back-to-school boost for Mac sales.

Quite the Turnaround ★

Yahoo Finance story that ran not a month ago, not a week ago, but yesterday:

Robinhood, which is responsible for popularizing both commission-free trades and fractional investing, has long had the goal of democratizing investing. In an interview with Yahoo Finance, CEO Vlad Tenev explained that the investing climate of the past few days has illustrated a key problem in the world of investing — inequity.

“Retail investors and individuals have felt like they’ve been talked down to. Lots of them felt like they haven’t been taken seriously,” he said. “There’s this term ‘sophisticated investor’ that’s been thrown around, so there’s an idea that they’re unsophisticated.” [...]

“I think people are seeing now that [retail investors] now have the ability to invest and they’re empowered,” Tenev said.

Yesterday: Robinhood customers are empowered.

Today: Robinhood customers can’t buy the stocks they want to buy.

I don’t see how Robinhood ever recovers from this reputation-wise. Who would ever trust them after this? Their slogan was literally “Let the people trade.” They’re already in legal trouble too.

Robinhood Shenanigans Draw the Ire of Congressional Democrats ★

Rep. Alexandria Ocasio-Cortez, linking to Motherboard’s story on Robinhood blocking its users from buying GameStop:

This is unacceptable.

We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.

As a member of the Financial Services Cmte, I’d support a hearing if necessary.

Rep. Rashida Tlaib:

This is beyond absurd. @FSCDems need to have a hearing on Robinhood’s market manipulation. They’re blocking the ability to trade to protect Wall St. hedge funds, stealing millions of dollars from their users to protect people who’ve used the stock market as a casino for decades.

There might be bipartisan outrage in Congress targeting Robinhood’s actions, if this tweet from Ted Cruz is indicative. (Don’t miss AOC’s response.)

Robinhood Blocks Buying – but Not Selling – GameStop, AMC, and BlackBerry Stock ★

Chaim Gartenberg, writing for The Verge:

Robinhood has added new limits to its app to restrict users from buying or trading any of the popular Reddit r/WallStreetBets stocks, including GameStop ($GME), AMC ($AMC), BlackBerry ($BB), Bed Bath & Beyond ($BBBY), Nokia ($NOK), and more. Users will still be allowed to close out existing positions but won’t be able to buy more of the stocks. The company is citing “recent volatility” in the market as the reasoning behind the change.

The development is the latest in an ongoing saga that has seen a group of Reddit users from the WallStreetBets subreddit band together in an effort to drive up the stock prices of companies like GameStop and BlackBerry, in defiance of traditional hedge funds that had shorted those firms. Robinhood — a popular stock market application that allows amateur day traders to purchase those stocks without fees — has been a key tool in the Reddit group’s ability to push prices up.

Preventing their users from buying — but not selling — a particular stock is bananas. It absolutely reeks of market manipulation.

The basic problem, as I understand it, is that Robinhood is beholden not to its users, but to hedge funds. Robinhood’s big hook to users is that they don’t charge any fees on trades. On the surface, that sounds like the classic First CityWide Change Bank SNL skit. But Robinhood does make money — just not from its retail customers. What they do is charge hedge funds for access to the firehose of Robinhood retail transactions, and these big traders have milliseconds of advance notice of trades, during which they can play arbitrage. Here’s a good thread on Twitter explaining it. Update: I’m not saying there’s anything fishy about no-fee brokerages. I’m only pointing out that they do make money on trades, just that when you look at how they do make money, you can see how they might have a conflict of interest.

So Robinhood doesn’t exist to make money from its users. They exist to allow hedge funds to make money by giving them access to what Robinhood retail users are buying and selling a fraction of a second in advance.

This whole GameStop mania is in large part driven by the fact that hedge funds are short on GameStop, and need GameStop’s bubble to pop now. I’m not saying Robinhood is trying to help hedge funds who shorted GameStop, but if they were trying to do that, the obvious way would be to do what they’re doing — disallow buying GameStop (et al.) but allow selling, to facilitate a sell-off panic. And Robinhood isn’t just any broker — they’re a favored broker of the WallStreetBets crowd, ~~with a remarkable 56 percent of Robinhood users owning some amount of GameStop stock.~~ Update: Motherboard has since retracted this number, but there’s no question Robinhood is — well, was — incredibly popular with the WallStreetBets crowd.