Mega-cap Tech Earnings: Apple Delivers, Facebook’s headwinds, Tesla’s profit-taking, SEC statement

The Nasdaq extended its declines after big earnings from Apple, Facebook, and Tesla failed to erase the overall bearish sentiment that is stemming from valuation concerns as new retail traders continue their wave of turmoil across some the most heavily shorted stocks.  Apple shares fluctuated in after-hours trade which should mean any hopes of a rebound for the broader indexes will likely fade.  Asian stocks will likely open broadly lower given the Fed and Apple were unable to reverse course with the weakness that happened in the US session.

SEC

The SEC issued a statement after the earnings barrage.  The statement noted, “We are aware of and actively monitoring the on-going market volatility in the options and equities markets and, consistent with our mission to protect investors and maintain fair, orderly, and efficient markets, we are working with our fellow regulators to assess the situation and review the activities of regulated entities, financial intermediaries, and other market participants.”

The Reddit army should prepare for stricter rules and regulation shortly, which should kill the idea that what happened with GameStop will happen with others.

Apple

Apple delivered!  Apple’s revenue hit an eye-dropping $111.4 billion, above the $103.12 billion estimate, also topping the $100 billion mark for the first time.  EPS impressed at $1.68, a 26-cent beat, while iPhone sales rose to $65.6 billion, well above the $60.3 billion consensus estimate.  The only thing that disappointed was Mac sales, which only came in a tad softer at $8.7 billion.

Apple’s super cycle thesis remains intact, but given the amount of froth in the market, share prices may struggle until valuation concerns ease.

Facebook
The initial scan of Facebook’s earnings saw investors hit the sell button on headwinds and regulatory fears.  The CFO noted more significant ad targeting headwinds in 2021 and uncertainty from platform changes with Apple’s iOS14.

After the dust settled, Facebook shares recovered most of their steep decline as investors gave a thumbs up to their results.  Facebook had a strong beat on the top and bottom line; EPS $3.88 much higher than the consensus estimate of $3.24 and revenue impressed at $28.1 billion, well above the $26.4 billion analysts’ forecast.  Facebook also announced a new share buyback program up to $25 billion.

Tesla

Tesla’s initially tanked after the bottom line disappointed immensely.  The quarter was strong on deliveries but given the recent run the stock was ripe for a reason to lock in profits. The other EV makers and suppliers could see some follow through weakness here.

The bar has been set so high for Tesla; it seems so easy to be disappointed.  Tesla reported Q4 EPS at $0.80, a 23-cent miss, while revenues impressed at $10.74 billion, well above the $10.38 billion.  Tesla anticipates operating margin growth over time and expects to achieve 50% annual growth in vehicle sales.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya