March 27, 2023

Today's Topics

Hello! With Q1 drawing to a close, we think it’s an appropriate time to take a broad look — via markets, Meta, and the movies — at how the first 3 months of 2023 have gone so far. We’re exploring:

  • Taking stock: How the S&P 500 is faring so far.
  • Meta veers: Zuck’s latest approach has been a hit with investors.
  • Recovery mode: The box office is back… sort of.
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Taking stock

We thought we’d first reflect on the stock market which — despite having to reckon with banking blow-ups, geopolitical tensions, and interest rate hikes over the last 3 months — has had a pretty solid start to the year.

The S&P 500 Index is currently up ~4% in 2023 as investors continue to muddle through the uncertainty of rising interest rates and their impact on the economy. Energy stocks have failed to replicate their 2022 performance and pharmaceutical stocks are no longer boosted by Covid vaccine rollouts. Shares in Moderna, for example, are down 16%, while Pfizer has dropped 21%. Casino operators and the entire travel industry are currently on the other end of the spectrum in the post-Covid world, with Wynn Resorts, United Airlines and Royal Caribbean all up 29%, 23% and 10%, respectively.

Tech stocks strike back

The biggest comeback story, however, has been tech.

Tech stocks account for 4 of the 5 best-performing stocks in the S&P 500 this year, a strong turnaround for the sector after a particularly brutal 2022. Perhaps investors felt last year’s hammering was overdone, or maybe they’re responding to the sector’s new penchant for ruthless efficiency and focus, with many companies cutting back and reversing their recent rampant hiring sprees. For example, Meta is the second-best-performing company in the S&P 500, after really pushing 2023 as its “Year of Efficiency”. An approach that — so far — seems to be working.

New year, new Meta

Mark Zuckerberg’s leaner, meaner version of Meta has been a hit with investors, as the company’s shares outperform everything but Nvidia on the S&P 500 so far this year. That resurgence has added ~$220bn to Meta’s market cap so far, undoing some of the $600bn+ the tech giant lost in 2022.

In a recent internal update, the Meta chief warned that the company is planning about 10,000 further cutbacks and that 5,000 open roles would be scrapped. The company's first round of cuts last year apparently taught Zuck that “leaner is better”, with the CEO also announcing intentions to streamline and cancel low-priority and duplicative projects.

Meta veers

This frugal new outlook is a rather dramatic shift for Zuckerberg's company. Meta grew its headcount 144% in 4 years and has been spending billions on “Reality Labs”, the company’s metaverse project that hasn’t exactly been a hit with investors. Indeed, even Zuck may now be reconsidering whether people actually want to strap on their headsets and live in his virtual world, with the strategy switch-up including a renewed focus on AI — perhaps a response to the current hype around tools like ChatGPT.

With everything going on, it’s easy to lose sight of what’s still at the company's core: social media apps, which are doing just fine (especially if TikTok gets banned). Indeed, just after its 19th birthday, Facebook still counts a staggering 2 billion daily active users.

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Healing process

While Zuckerberg’s been focussed on his “year of efficiency”, Hollywood’s started another year in recovery mode, though things are looking a little brighter at the box office as takings gradually edge closer to pre-pandemic levels.

Indeed, with the number of wide releases set to increase across the board this year, plus Apple and Amazon announcing plans to spend $1 billion each to boost their respective theatrical release rosters, the fortunes of the silver screen may finally be turning for good.

March movie madness

With Creed III, Scream VI, Shazam: Fury of the Gods, and John Wick: Chapter 4, March has certainly been littered with mass-appeal movies — so much so that box office analysts have compared the slate to pre-Covid release schedules. The slew of sequels won’t help dispel the theory that Hollywood’s low on original ideas, but they have been instrumental in getting this year’s box office off to the best start since 2020.

Data from Box Office Mojo shows that US theaters took in $563 million in March, contributing to the $1.65 billion total grossed in 2023 so far. Though that’s down from the 2005-2019 figures for the same period — which never dropped below the $2 billion threshold — it’s still a marked improvement on 2022’s tally, when domestic box office takings sat at $1.34 billion.

More Data

• Elon Musk has reportedly valued Twitter at just $20bn, less than half of the $44bn he bought it for only 5 months ago.

• Mr. Pickles, a 90-year-old tortoise, has just become a father of 3.

• Spotify has used just 10% of its $100m Creator Equity Fund, money set aside last year to fund diversity initiatives following controversy surrounding podcaster Joe Rogan last year.


• Visualizing the age range of global leaders.

• Machine earning: the jobs Americans believe are most at risk of getting replaced by AI.

Off the charts: Which company, that Microsoft is planning to acquire for ~$70bn, saw its share price surge last week after the British competition regulator dropped its key concern around the takeover? [Answer below].

Answer here.

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