What’s going on here?

Meta was the first of tech’s “trillion-dollar club” to report results from last quarter, and it quickly demonstrated just how hard investors are to please.

What does this mean?

Investors had high hopes for Meta. They’d sent the share price up 40% this year and 130% over the past 12 months – impressed by the company getting over its advertising slump, cutting costs, and updating its share buyback and dividend schemes. Facebook’s parent mostly delivered: its earnings beat expectations, with profit more than doubling from a year earlier. Sales were better than expected, too, rising 27% from the same time last year and pushing the rate of revenue growth up for the fifth straight quarter. But a weaker-than-usual revenue forecast for the current quarter and higher expected costs were a downer, sending the stock initially plunging more than 10%.

Why should I care?

For markets: Meta did it better.

While some tech companies – ahem, Apple – are drag-and-dropping little AI enhancements into their products, Meta released the third version of its Llama system last week. The open-source large language model is set to compete with the likes of ChatGPT, but it’s costing Meta more than a few pretty pennies – and that’s understandably making investors nervous. That said, the company believes the tech will prove its worth by making users more engaged, scraping their behavioral data, and eventually paving the way for fresh monetization strategies.

The bigger picture: What to expect when you’re expecting success.

The world’s biggest tech companies have solid track records of growing profit. That doesn’t just translate into high valuations and stock prices, but also extremely elevated expectations. So now, it’s increasingly hard for them to impress investors – as Netflix experienced too when its stock fell 9% despite unveiling relatively positive results last week. Warren Buffett’s words of wisdom might ring true, then: if an investor trusts a company’s fundamentals, he believes they should ignore the short-term bumps and trust the process.

What’s going on here?

Gucci-owner Kering announced that profit will fall more than analysts expected, as it desperately tries to scrub up its star brand’s démodé image.

What does this mean?

Kering already warned investors about Gucci’s slow sales last month. But last night, the French luxury group issued a drastic profit warning. Kering now expects profit from the first half of the year to fall around 40 to 45% from the same time last year, even worse than the 24 to 30% that analysts predicted. That’s partly because Gucci’s sales from the first quarter fell 18% compared to the year before. And because Gucci brings in around half of the group’s sales and two-thirds of its profit, that overruled more stable results from Yves Saint Laurent and Bottega Veneta, bringing Kering’s total sales down 10%. Investors heeded the warning, sending Kering’s stock down by 7% after the news.

Why should I care?

Zooming in: Gucci needs a style check.

Kering hasn’t lost its fashion sense: aware that Gucci’s not-quite-affordable, not-quite-top-end designs aren’t pulling in shoppers like they used to, the group has called for a makeover. In fact, the new creative designer’s first collection started rolling out in February. Problem is, it takes a lot of time and money to refresh a brand, and there’s always the chance that Gucci has simply become passé.

The bigger picture: Kering missed the dress code memo.

Shoppers clearly still have a penchant for luxury. LVMH – one of Kering’s biggest rivals – pulled sales up by 3% over the past year, and Hermès is expected to reveal double-digit growth. Some may argue, then, that Kering’s decline offers investors a chance to buy into a seemingly stable industry for less than they’d usually pay. Mind you, whether or not that pays off may hinge on Gucci’s rebrand – and that’s hard to judge unless you have Fashion Week regulars on speed dial.