Coffee With Greta: Hot Labor Market, Apple Beats
DJIA Futures: +221 (+0.7%) SPX Futures: +33 (+0.8%) NASDAQ Futures: +87 (+0.7%) Good morning friends! Futures are higher as traders digest a hot jobs report and key earnings. Let’s get right to it! Hot Labor Market The U.S. economy added far more jobs than expected in April. The Labor Department reported a gain of 253,000 jobs last month vs expectations for 180,000. The unemployment rate also fell unexpectedly to 3.4% vs expectations for an increase to 3.6%. That tied for the lowest level since 1969. Average hourly earnings rose 0.5% monthly and 4.4% annually vs 0.3% monthly and 4.2% annually expected. The data shows the labor market maintaining strength amid the Fed’s fight against inflation. Apple Tops Fiscal Q2 Expectations Apple (AAPL) shares are up 2.9% ahead of the open after reporting better-than-expected fiscal Q2 results, driven by strong iPhone sales. Here’s how the iPhone maker’s results compared to analysts’ estimates: EPS $1.52 vs $1.43 expected Revenue: $94.84 billion vs $92.96 billion expected Gross margin: 44.3% vs 44.1% expected Here’s how Apple’s revenue broke down by product: iPhone revenue: $51.33 billion vs $48.84 billion expected Mac revenue: $7.17 billion vs $7.80 billion expected iPad revenue: $6.67 billion vs $6.69 billion expected Other products revenue: $8.76 billion vs $8.43 billion expected Services revenue: $20.91 billion vs. $20.97 billion expected Apple did not provide official guidance. The company’s board authorized up to $90 billion in shares buybacks and hiked its dividend 4% to $0.24 per share. Coinbase Rallies On Q1 Beat Coinbase (COIN) shares are rallying 9.6% in premarket trade after beating Q1 expectations. Here’s how the crypto exchange’s results compared to analysts’ estimates: Loss per share: $0.34 vs $1.45 expected Revenue: $772.53 million vs $655 million expected Consumer trading volume plunged 71% year over year but subscription and services revenue more than doubled to $361.7 million. Coinbase forecast $300 million in Q2 subscription and services revenue and said it plans to focus on cost reduction efforts. Block Tops Q1 Revenue Expectations Block (SQ) shares are up 2.8% ahead of the open after beating Q1 revenue expectations. Here’s how the payments company’s results compared to analysts’ estimates: Loss per share: $0.40 vs $0.35 earnings per share expected Revenue: $4.99 billion vs $4.6 billion expected That higher than expected revenue was driven by Block’s Cash App mobile payments platform. Cash App’s gross profit grew 49% year over year and monthly active card actives jumped 34%. Block’s point-of-sale system Square’s gross profit increased just 16%. The company raised its full-year adjusted ebitda forecast to $1.36 billion from $1.3 billion previously. Lyft Plunges On Weak Guidance Lyft (LYFT) shares are plunging 15.2% in premarket trade after mixed Q1 results and weak Q2 guidance. Here’s how the ride-hailing company’s results compared to analysts’ estimates: Loss per share: $0.07 vs $0.06 expected Revenue: $1 billion vs $981 million expected Lyft expects Q2 revenue between $1 billion and $1.02 billion vs analysts’ projections for $1.08 billion. The company anticipates adjusted ebitda between $20 million and $30 million vs analysts’ estimates of $49.3 million. DoorDash Jumps After Earnings DoorDash (DASH) shares are up 4.4% ahead of the open after reporting strong Q1 results. Here’s how the delivery platform’s results compared to analysts’ estimates: Loss per share: $0.41 vs $0.58 expected Revenue: $2.04 billion vs $1.93 billion expected Total orders jumped 27% year over year to 512 million vs 493 million expected. DoorDash hiked its full-year guidance for gross order value to between $63 billion and $64.5 billion, up from $60 billion to $63 billion previously.
Continue Reading -->Coffee With Greta: Is Another Bank Failing?
DJIA Futures: -69 (-0.2%) SPX Futures: -11 (-0.3%) NASDAQ Futures: -13 (-0.1%) Good morning friends! Futures are falling as regional bank fears return. Let’s get right to it! PacWest Plunges PacWest Bancorp (PACW) shares are plunging 37.7% ahead of the open amid concerns it will be the next regional bank to fail. In a statement this morning, the bank confirmed reports that the bank is reviewing “strategic options”, including a potential sale. PacWest said it “will continue to evaluate all options to maximize shareholder value.” The statement also said it had not experienced “out-of-the-ordinary deposit flows” after the failure of First Republic Bank earlier this week. The news is dragging down other regional banks as well with the SPDR S&P Regional Banking ETF (KRE) down 3.9%, Western Alliance Bancorp (WAL) dropping 14.4%, and Comerica (CMA) sliding 7%. PacWest reported Q1 earnings last week, which showed total deposits declined by $5 billion in the first quarter to $28.2 billion. But the bank said it was already seeing a rebound in deposits at the end of the quarter and into the beginning of Q2. The turmoil for PacWest comes after the Fed said on Wednesday that the U.S. banking system is sound and resilient. Qualcomm Falls On Weak Guidance Qualcomm (QCOM) shares are falling 7.5% in premarket trade after reporting fiscal Q2 results that were in line with expectations but issuing weak guidance. Here’s how the chipmaker’s results compared to analysts’ estimates: Adjusted EPS: $2.15 as expected Revenue: $9.28 billion vs $9.1 billion expected Total revenue dropped 17% year over year, driven by a slowdown in demand for its cellphone chips. That drop is expected to continue with Qualcomm forecasting $8.5 billion in fiscal Q3 revenue, missing expectations of $9.14 billion. The company also forecast EPS of $1.80 vs analysts’ estimates of $2.16. Moderna Reports Surprise Q1 Profit Moderna (MRNA) shares are up 1.8% ahead of the open after reporting a surprise profit in the first quarter. Here’s how the pharmaceutical giant’s results compared to analysts’ estimates: EPS: $0.19 vs a loss of $1.77 per share expected Revenue: $1.86 billion vs $1.18 billion expected That profit surprise came despite lower demand for the company’s Covid vaccine. Revenue was down 30% year over year. Moderna maintained its full-year guidance for around $5 billion in Covid vaccine revenue. Weekly Jobless Claims Climb Weekly jobless claims rose more than expected last week as the labor market continues to slowly tighten. The Labor Department reported 242,000 Americans filed initial unemployment claims. That was up by 13,000 from the previous week and higher than 236,000 expected. Continuing claims though fell by 38,000 to 1.81 million in the week ending April 22. Q1 Productivity Tumbles Worker productivity dropped more than expected in the first quarter. The Bureau of Labor Statistics reported productivity fell 2.7% annually vs expectations for a 1.9% decrease. Output during the quarter rose just 0.2% while hours worked rose 3%. And labor costs picked back up as well. Unit-labor costs rose 4.5% in Q1, up from 3.3% in Q4. Over the past 12-months, unit labor costs have risen 5.3%. Those rising wages have been a problem for the Fed in its fight against inflation. Trade Deficit Narrows The U.S. trade deficit narrowed in March as exports rose. The Commerce Department reported the deficit dropped by $6.4 billion to $64.2 billion. The decline came as exports rose by $5.3 billion to $256.2 billion. Imports fell by $1.1 billion to $320.4 billion. The goods deficit with China fell by $2.3 billion to $22.9 billion in March. In Case You Missed It The Federal Reserve hiked rates as expected by 25 basis points on Wednesday. That puts the federal funds rate in a range of 5% to 5.25%, the highest since August 2007. The FOMC statement seemed to hint this will be the last rate hike as it removed language about future policy tightening being appropriate. But Fed Chair Jerome Powell said in his press conference, “A decision on a pause has not been made today.” Powell emphasized that “the process of getting inflation back down to 2% has a long way to go.”
Continue Reading -->Coffee With Greta: Fed Day
DJIA Futures: +25 (+0.1%) SPX Futures: +5 (+0.1%) NASDAQ Futures:+18 (+0.1%) Good morning friends! Futures are up slightly as traders look ahead to this afternoon’s Fed decision. Let’s get right to it! Fed Day The Federal Reserve releases its latest interest rate decision at 2:00 p.m. ET today. CME Group’s FedWatch Tool currently shows 82.8% of traders anticipating another 25 basis point rate hike. But the real focus will be on the language in the Fed statement about future hikes and the Fed Chair’s tone during his 2:30 p.m. press conference. Traders will also be listening for what Powell has to say about the regional banking crisis after the failure of First Republic Bank earlier this week. Private Job Growth Surges Private sector job growth was way hotter than expected in April. Payroll firm ADP reported that private employers added 296,000 jobs last month. That was sharply higher than 133,000 expected and up from the downwardly revised 142,000 in March. It was the highest monthly increase since July 2022. But annual pay growth continued to slow, up 6.7% year over year. The leisure and hospitality sector led April’s gains, adding 154,000 jobs. Education and health services added 69,000, construction added 53,000, natural resources and mining added 52,000, and trade, transportation, and utilities added 32,000. The financial services sector lost 28,000 jobs while manufacturing lost 38,000. This data comes ahead of the Labor Department’s official April jobs report on Friday which is expected to show the U.S. economy added 180,000 jobs last month with the unemployment rate ticking higher to 3.6%. AMD Tops Q1 Estimates, Issues Weak Guidance Advanced Micro Devices (AMD) shares are falling 7.4% ahead of the open after beating Q1 expectations on the top and bottom line but issuing weak guidance. Here’s how the chipmaker’s results compared to analysts’ expectations: Adjusted EPS: $0.60 vs $0.56 expected Revenue: $5.35 billion vs $5.3 billion expected Although the results topped analysts’ estimates, revenue was down 9% year over year and AMD’s Q2 guidance was weaker than expected. The company expects $5.3 billion in Q2 revenue vs $5.48 billion expected. Ford Smashes Q1 Expectations, Maintains Outlook Ford (F) shares are down 1.1% in premarket trading after solidly beating Q1 expectations but reiterating its full-year guidance. Here’s how the automaker’s results compared to analysts’ estimates: Adjusted EPS: $0.63 vs $0.41 expected Revenue: $39.09 billion vs $36.08 billion expected The CFO said Q1 was a “peek at what’s possible to generate value and growth.” Ford reiterated its forecast for full-year adjusted earnings between $9 billion and $11 billion. It also still expects to lose about $3 billion from its EV operations this year after the segment lost $722 million in Q1. But Ford’s traditional car business earned $2.6 billion in profit while its fleet operations reported $1.4 billion in earnings. Starbucks Earnings Top Expectations Starbucks (SBUX) shares are down 5.3% ahead of the open after beating fiscal Q2 expectations on the top and bottom line. Here’s how the coffee giant’s results compared to analysts’ estimates: Adjusted EPS: $0.74 vs $0.65 expected Revenue: $8.72 billion vs $8.4 billion expected Global same-store sales were up 11% from a year ago vs expectations of 7.1%. Same-store sales jumped 12% in the U.S. and 3% in China, which is Starbucks’ second-largest market. It was the first sales increase in China since Q3 2021. But the stock is sinking after Starbucks reaffirmed its full-year outlook. The company still expects revenue growth of 10% to 12% and EPS growth on the low end of 15% to 20%. CVS Slips On Lower Outlook CVS (CVS) shares are down 2.6% in premarket trade after beating Q1 expectations but lowering its profit outlook. Here’s how the retailer’s results compared to analysts’ estimates: Adjusted EPS: $2.20 vs $2.09 expected Revenue: $85.28 billion vs $80.81 billion expected Revenue was up 11% year over year. But CVS lowered its 2023 adjusted EPS guidance to a range of $8.50 to $8.70, down $0.20 from its previous forecast. The company said that lower guidance was due to costs associated with its acquisitions of Signify Health and Oak Street Health. In Case You Missed It Job openings fell more than expected in March. The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) shows there were 9.6 million available jobs in March vs 9.7 million expected. That was down from 9.9 million in February and the lowest number of openings since April 2021.
Continue Reading -->Coffee With Greta: Fed Meeting Begins
DJIA Futures: -85 (-0.3%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -5 (-0.03%) Good morning friends! Futures are slipping as the Fed meeting kicks off. Let’s get right to it! Focus On The Fed The Federal Reserve kicks off its two-day policy meeting today with the rate hike decision set to be released at 2:00 p.m. ET on Wednesday. CME Group’s FedWatch Tool shows nearly 91% of traders expecting another 25 basis point rate hike. There will be a lot of focus on Fed Chair Jerome Powell’s press conference following the meeting to see whether he shifts to a more dovish tone or stays hawkish. The Fed’s dot plot previously showed this will be the last rate hike with the bank planning to then hold rates higher until 2024. Pfizer Rises After Earnings Beat Pfizer (PFE) are up 0.9% ahead of the open after beating Q1 expectations on the top and bottom line. Here’s how the pharmaceutical giant’s results compared to analysts’ estimates: Adjusted EPS: $1.23 vs $0.98 expected Revenue: $18.28 billion vs $16.59 billion expected Sales were down 29% year over year with Covid vaccine sales tumbling 75%. Excluding Covid product sales, Pfizer’s revenue was up 5% year over year driven by products from recently acquired companies. The company reiterated its full-year forecast for both earnings and revenue. Uber Rallies On Revenue Beat Uber Technologies (UBER) shares are rallying 9.4% in premarket trade after reporting better-than-expected Q1 results. Here’s how the ride hailing giant’s results compared to analysts’ estimates: Loss per share: $0.08 vs $0.09 expected Revenue: $8.82 billion vs $8.72 billion expected Revenue was up 29% year over year. Uber’s CEO said the company is already starting to use AI to improve its business. He said, “We are still in the early stages of using large data models to power improved user experiences and efficiencies across our platform, with much more to come.” Uber also reported $31.4 billion in gross bookings during the quarter, up 19% from a year ago. Here’s how those bookings broke down between its business segments: Mobility gross bookings: $14.98 billion, up 40% year over year Delivery gross bookings: $15.02 billion, up 8% year over year The company expected to report between $33 billion and $34 billion in Q2 gross bookings Morgan Stanley Planning More Layoffs Morgan Stanley (MS) shares are flat ahead of the open following a report the company is planing more layoffs. Bloomberg first reported the investment bank is planning to eliminate roughly 3,000 positions by the end of June. That would represent about 5% of the bank’s workforce. Morgan Stanley’s wealth management division, which includes financial advisers, would reportedly be excluded from the cuts. Tesla Hikes Prices Tesla (TSLA) shares are up 0.2% in premarket trade after raising prices on several of its cars in the U.S. and China. In China, the Model 3 now starts at 231,900 Chinese yuan vs 229,900 yuan previously. The Model Y price was also raised by 2,000 yuan to 263,900 yuan. In the U.S., the Model 3 and Model Y prices were hiked by $250 to $40,240 and $47,240 respectively. Tesla’s prices are still lower than at the start of the year following several price cuts ahead of these increases. In Case You Missed It Manufacturing activity improved more than expected in April. The Institute for Supply Management’s manufacturing PMI rose to 47.1% from 46.3%. That was better than expectations for 46.7% but still below the key 50% level which signals contraction across the sector.
Continue Reading -->It’s a Big Week
Most regions around the world are closed for May Day. FRC shareholders are getting wiped out as JPM and the FDIC pick up the pieces. The FOMC is this Wednesday. Last week, the bears broke the SPX below 4089 but could only keep it below for a day. On Friday, it cleared 4138 to see 4170. Big moves in names like MSFT and META helped. SPY briefly broke the $410-$408 area last week and then the active bulls took it back on Thursday to see $415.94 Friday. It wasn’t the easiest of action but we had our levels. Now we’ll see if we digest ahead of the FOMC Wednesday. $418.31 is the February high. QQQ had a battle around the $314.97 pivot last week. The active bulls took it back on Thursday. On Friday it hit $322.65. Watch this sector as it’s been leading the way. If it holds the $318 area this week, the door is open for a move toward $334. Now let’s look at some individual names. AAPL keeps proving it has “Go To” status. It cleared $165 to get some momentum back to see $169.85. It reports on Thursday. Maybe it goes red to green today. We’ll see where it is Thursday for option strategies. For today, see if it holds the $167 area. TSLA reclaimed $153.15 and had a pretty strong session Thursday to have some switch gears. On Friday it cleared and held $160.87 to see $165. Perhaps this can get more attention. See if it can go red to green and how it deals with Friday’s high for a quick push. MSFT was great post-earnings. Some were long vs. $292ish. Other waited for it to clear $299.57 to see a high of $308+ to manage. It needs to hold $303. META had a big gap and go but was very choppy yesterday. We’ll see can if it hold $235.75 or if it filsl a portion of that gap to get choppier. If it holds, it can clear $241.69. GOOGL is tricky but keeps building. If it continues to hold $102-$103, perhaps there’s a better move if it can clear the $108.37-$109.20 area with volume. Scott Redler Positions Disclosure as of 2023-05-01 at 8.11.10 AM
Continue Reading -->Coffee With Greta: Another Bank Failure
DJIA Futures: +9 (+0.03%) SPX Futures: -3 (-0.1%) NASDAQ Futures: -17 (-0.1%) Good morning friends! Futures are flat as another regional bank fails and traders get ready for a big week on Wall Street. Let’s get right to it! JPMorgan Buys First Republic After Failure First Republic Bank (FRC) was officially seized by regulators this morning, making it the third regional bank to fail since March. JPMorgan Chase (JPM) was the winner of a weekend auction for the bank and shares are up 4.3% ahead of the open. The largest bank in the U.S. is getting about $92 billion in deposits and taking over $73 billion in loans and $30 billion in securities. JPMorgan will share losses on mortgages and commercial loans assumed in the deal with the Federal Deposit Insurance Corporation. It also received a $50 billion credit line from the FDIC. This deal will cost the FDIC’s Deposit Insurance Fund $13 billion. The FDIC said, “As part of the transaction, First Republic Bank’s 84 offices in eight states will reopen as branches of JPMorgan Chase Bank, National Association, today during normal business hours. All depositors of First Republic Bank will become depositors of JPMorgan Chase Bank, National Association, and will have full access to all of their deposits.” JPMorgan CEO Jamie Dimon said, “Our government invited us and others to step up, and we did. This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise.” SoFi Rallies On Earnings Beat SoFi Technologies (SOFI) shares are rallying 6.4% in premarket trade after beating Q1 expectations on the top and bottom line. Here’s how the online lending giant’s results compared to analysts’ estimates: Adjusted loss per share: $0.05 vs $0.08 expected Revenue: $460.16 million vs $441 million expected SoFi added 433,000 members during the quarter, bringing the total to 5.7 million. The company hiked its full-year guidance now expecting revenue between $1.96 billion to $2.02 billion vs $1.93 billion to $2 billion previously. For the second quarter, SoFi expects revenue of $470 million to $480 million vs analysts’ expectations for $463.8 million. Big Week Traders are gearing up for a busy week on Wall Street with earnings, the Fed, and some big economic data. More than 1,400 companies are set to report earnings this week including giants like Ford (F), Starbucks (SBUX), Uber (UBER), Lyft (LYFT), and Apple (AAPL). Plus, it’s Fed week with the central bank’s latest rate decision set to be released on Wednesday. CME Group’s FedWatch Tool shows 87.5% of traders expecting another 25 basis point hike this week. And it’s also jobs week. The Labor Department releases the official April jobs report Friday morning. Other key jobs data this week includes the job openings and labor turnover survey (JOLTS) on Tuesday, ADP’s April private employment report on Wednesday, and weekly jobless claims on Thursday. In Case You Missed It The University of Michigan’s final consumer sentiment reading for April was unchanged at 63.5 on Friday. That was in line with expectations. The expectations index improved to 60.5 from the 60.3 estimate. The current conditions index fell to 68.2 from the 68.6 estimate. Consumers’ 1-year inflation expectations remained at 4.6% while the 5-year outlook ticked higher to 3.0%.
Continue Reading -->What’s On Tap for Traders: May 1 – 5
What a week! We had: Big earnings beats like Microsoft (MSFT) and Meta (META) Whiffs like Amazon (AMZN) and Snap (SNAP) First Republic (FRC) melting down A slowdown in US GDP Here’s your trading calendar before we dig into one of the busiest weeks of 2023: (click to enlarge) First, let’s start with a quick review of the recent action: Tech Dominates… For Now Stocks finished slightly higher for the month as buyers overlooked Amazon’s (AMZN) post-earnings decline, the US GDP miss, and the First Republic (FRC) implosion. Related: How Jeff Cooper Nailed Amazon at $122 And in an impressive turnaround from a weak start, the SPY finished right at the highs of the day: Year-to-date, QQQ’s is decimating the other major index ETFs thanks to the tech stock boom. Of course, next week is huge for tech investors thanks to these earnings reports: AMD (AMD) on Tuesday Qualcomm (QCOM) on Wednesday Apple (AAPL) on Thursday Apple always demands major attention from investors, and the stakes are high thanks to the stock’s 29%+ gain this year: David Prince tells us “Slowing iPhone demand could be offset by the services business picking up steam, but the upside potential looks muted from here.” If you’re interested in trading Apple pre and post-earnings, check out Inner Circle because David and his team will be tracking the stock closely next week. AMD and Qualcomm should also be on your radar because we’ll get insights into where we are in the semiconductor cycle. And of course, it will be fun to see how many times they say ‘AI’ on their conference calls. Can they top Google, Microsoft, and META, each of whom said ‘AI’ nearly 50 times? Other Earnings Reports of Interest The fun does not end with tech. Starbucks (SBUX) reports Tuesday. The stock hit a 1-year high this week in the wake of strong numbers from McDonald’s (MCD) and Pepsi (PEP): So we’ll see if the struggling consumer still has cash for those fabulous orange mocha frappucinos: Crypto exchange Coinbase (COIN) reports Thursday. Bitcoin has been one of the best-performing risk assets this year, so we’ll see if that’s driving results for Coinbase, which has been down in the dumps thanks to regulatory threats: And on Friday, meme stock giant AMC Entertainment (AMC) drops its earnings numbers. We also have: Monday: Stryker (SYK), Vertex Pharmaceuticals (VRTX) Tuesday: Uber (UBER), Illinois Tool Works (ITW), Eaton (ETN) Wednesday: CVS (CVS), Estee Lauder (EL), Progressive (PGR) Thursday: ConocoPhillips (COP), Booking Holdings (BKNG), Shopify (SHOP), Square (SQ), Doordash (DASH) Friday: Cigna (CI) Okay, that’s enough earnings talk because… The Fed Is Dead Ahead We’ve got a critical week ahead on the US economic front. The Fed will announce its latest rate decision on Wednesday. T3 Live Chief Strategic Officer Scott Redler said “There’s a 90% chance they go 25 bps, and most think that’s end of the rate hike cycle. This could be an inflection point for this cycle. Many people think the Fed will cut in the second half, but I don’t see that happening unless we go to SPX 3700 or lower. If we hold above 4100 and start squeezing towards resistance at 4300, the Fed isn’t cutting.” IMPORTANT: Scott is hosting a Fed Day trading event in the Alpha Team VTF® on Fed Day. You can sign up right here. Scott’s Positions as of 2023-04-28 at 3.39.56 PM Click to enlarge On top of the Fed, we’ve got plenty of employment data coming including: Tuesday: JOLTs Job Openings Thursday: Initial Jobless Claims Friday: Nonfarm Payrolls We also have some key international reports, including: Tuesday: Australia Rate decision, Eurozone CPI Wednesday: China Manufacturing PMI Thursday: ECB Rate Decision Friday: Canada Employment How do Traders Feel? BEARISH Do traders hate this market? Yes. Hedge funds have the largest net short position in S&P 500 futures since 2011: Just as large speculators/hedge funds have built largest net short position for S&P 500 futures since 2011 (blue), leveraged investors have also boosted net short positions on 10y U.S. Treasury futures (orange) to record pic.twitter.com/zfcqdrHO57 — Liz Ann Sonders (@LizAnnSonders) April 25, 2023 And the American Association of Individual Investors says just 24.1% of investors are bullish, well below the long-term average of 37.5%: “Optimism is unusually low for the 49th time out of the past 69 weeks,” AAII says. Get to Know Kira Turner Rodeo is more dangerous than NFL football. And rodeo is where Inner Circle’s Kira Turner learned risk management. Learn more about her story in this episode of the Madam Trader podcast: We’ll see you bright and early Monday morning! Good luck out there!
Continue Reading -->Coffee With Greta: Amazon’s Storm Cloud
DJIA Futures: -107 (-0.3%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -11 (-0.1%) Good morning friends! Futures are falling as traders digest the latest batch of earnings and new inflation data. Let’s get right to it! Amazon’s Cloud Outlook Disappoints Amazon (AMZN) shares are down 2.4% ahead of the open as the company’s uncertain outlook for its cloud services overshadows strong Q1 results. Here’s how the company’s results compared to analysts’ estimates: EPS: $0.31 vs $0.21 expected Revenue: $127.4 billion vs $124.6 billion expected Amazon Web Services revenue: $21.3 billion vs $21.22 billion expected Advertising revenue: $9.5 billion vs $9.1 billion expected AWS sales rose about 16% in Q1, which was a slowdown from 20% in the previous quarter. Amazon’s CFO warned that slowdown is continuing. He said, “customers continue to evaluate ways to optimize their cloud spending in response to these tough economic conditions in the first quarter. We are seeing these optimizations continue into the second quarter with April revenue growth rates about 500 basis points lower than what we saw in Q1.” Amazon’s stock initially rallied in after-hours trading Thursday following the earnings beat but then dropped after the CFO’s comments on slowing cloud revenue. The company expected Q2 revenue between $127 billion and $133 billion vs analysts’ estimates of $129.8 billion. Snap Plunges On Q1 Miss Snap Inc (SNAP) shares are tumbling 18.5% in premarket trade after missing Q1 expectations. Here’s how the social media giant’s results compared to analysts’ estimates: Adjusted EPS: $0.01 vs $0.01 per share loss expected Revenue: 989 million vs $1.01 billion expected Daily active users: 383 million vs 384 million expected Average revenue per user: $2.58 vs $2.63 expected Snap did not provide any official Q2 guidance but said its “internal forecast” for revenue would be $1.04 billion, which would be down 6% year over yera and lower than analysts’ estimates of $1.10 billion. Intel Beats Despite Largest Quarterly Loss In Company History Intel (INTC) shares are up 6.8% ahead of the open after beating Q1 expectations on the top and bottom line. Here’s how the chipmaker’s results compared to analysts’ estimates: Adjusted loss per share: $0.04 vs $0.15 expected Revenue: $11.7 billion vs $11.04 billion expected Earnings plummeted 133% year over year while revenue dropped nearly 26%. The $2.8 billion net loss was the largest in company history. Intel forecast Q2 revenue of $12 billion and a $0.04 loss per share vs analysts’ expectations for a $0.01 loss per share on $11.75 billion in revenue. Exxon Mobil Reports Record Q1 Profit Exxon Mobil (XOM) shares are up 0.3% in premarket trade after reporting a record profit in the first quarter. Here’s how the oil giant’s results compared to analysts’ estimates: Adjusted EPS: $2.83 vs $2.60 expected Revenue: $86.56 billion vs $85.65 billion expected Exxon’s CFO said, “We delivered a first-quarter record despite the fact that energy prices and refining margins are softening a bit.” The earnings beat was driven by increased oil and gas production which rose by nearly 300,000 barrels per day year over year. That higher production helped offset lower gas prices during the quarter. Chevron Tops Q1 Expectations Chevron (CVX) shares are slipping 0.5% ahead of the open despite beating Q1 expectations on the top and bottom line. Here’s how the company’s results compared to analysts’ estimates: Adjusted EPS: $3.55 vs $3.40 expected Revenue: $50.79 billion vs $48.60 billion expected Higher margins in Chevron’s oil refining segment helped income surge more than five times to $1.8 billion. But profit in the oil and gas production business tumbled 25% as prices dropped. PCE Inflation Continues To Slow The Fed’s preferred inflation gauge slowed as expected in March. The Bureau of Economic Analysis’ personal consumption expenditures price index rose 0.1% last month and 4.2% year over year. The core PCE price index rose 0.3% monthly and 4.6% annually. That was in line with expectations on a monthly basis and slightly higher than estimates for a 4.5% gain annually. In Case You Missed It Pending home sales fell unexpectedly in March. The National Association of Realtors reported the number of contracts signed to purchase a home last month fell 5.2%. That missed expectations for a 0.5% increase and was the first drop since November. Pending sales were down 23.2% year over year. Lyft (LYFT) shares rose 1.5% on Thursday after the company announced layoffs. A new SEC filing showed the rideshare giant plans to cut 1,072 jobs, representing 26% of its workforce. These cuts come in addition to the 13% workforce reduction announced in November 2022.
Continue Reading -->Coffee With Greta: Mega Meta
DJIA Futures: +151 (+0.5%) SPX Futures: +23 (+0.6%) NASDAQ Futures: +136 (+1.1%) Good morning friends! Futures are rising as traders digest the latest batch of earnings and new economic data. Let’s get right to it! Meta Rallies On Earnings Beat Meta Platforms (META) shares are jumping 12.9% ahead of the open after beating Q1 expectations on the top and bottom line. Here’s how the social media giant’s results compared to analysts’ estimates: EPS: $2.20 vs $2.03 expected Revenue: $28.65 billion vs $27.65 billion expected Daily Active Users: 2.04 billion vs 2.01 billion expected Monthly Active Users: 2.99 billion as expected Average Revenue per User: $9.62 vs $9.30 expected Revenue jumped 3% year over year, the first increase in four quarters. The company forecast Q2 revenue between $29.5 billion and $32 billion vs analysts’ estimates of $29.5 billion. CEO Mark Zuckerberg said Meta is “becoming more efficient so we can build better products faster and put ourselves in a stronger position to deliver our long term vision.” The Reality Labs unit – aka the Metaverse unit – brought in $339 million in revenue but logged an operating loss of $3.99 billion. Meta said that operating loss will increase this year. Roku Tops Q1 Estimates Roku (ROKU) shares are slipping in premarket trade despite the company beating Q1 expectations and issuing strong guidance. Here’s how the streaming platform’s results compared to analysts’ estimates: Loss per share: $1.38 vs $1.47 expected Revenue: $741 million vs $708.5 million expected Roku’s active accounts jumped 17% year over year to 71.6 million. The number of hours spent watching streaming content on its platforms rose 20% to 25.1 billion. Roku expects $770 million in second-quarter revenue, topping analysts’ expectations for $708.5 million. Southwest Drops After Disappointing Earnings Southwest Airlines (LUV) shares are falling 4.7% ahead of the open after reporting a wider loss than expected in the first quarter. Here’s how the airline’s results compared to analysts’ estimates: Adjusted loss per share: $0.27 vs $0.23 expected Revenue: $5.71 billion vs $5.73 billion expected Southwest said it took a $325 million revenue hit during the quarter related to its holiday cancellations at the end of 2022. The company expects revenue struggles to continue this quarter. Southwest forecast revenue per available seat mile will be down 8% to 10% year over year in Q2 with capacity up 14% But the airline did forecast a profit for the current quarter. GDP Growth Slows U.S. economic growth slowed more than expected at the beginning of 2023. The Commerce Department’s initial estimate shows GDP rose at a 1.1% annualized pace in the first quarter. That was slower than economists’ expectations for 2% growth and down from 2.6% in Q4. Inflation remained high during the quarter with the PCE price index rising 4.2% vs 3.7% expected. Consumer spending rose 3.7% and exports jumped 4.8%. But gross private domestic investment tumbled 12.5%. Weekly Jobless Claims Tumble Weekly jobless claims dropped unexpectedly last week. The Labor Department reported 230,000 Americans filed initial claims for unemployment benefits. That was down by 16,000 and better than expectations for claims to rise to 249,000. Continuing claims fell by 3,000 to 1.86 million in the week ending April 15.
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