Coffee With Greta: Stocks Rise As GDP Beats
DJIA Futures: +87 (+0.3%)
SPX Futures: +23 (+0.6%)
NASDAQ Futures: +116 (+1.0%)
Good morning friends!
Futures are higher as traders digest strong Q4 GDP data and an earnings beat from Tesla.
Let’s get right to it!
U.S. Economy Expands More Than Expected
The U.S. economy grew more than expected at the end of 2022.
The Commerce Department’s first estimate shows GDP rose at a 2.9% annualized pace in Q4.
That was better than economists’ expectations for 2.8% but still down from 3.2% growth in Q3.
The data showed consumer spending remained strong at the end of the year, up 2.1% on a quarterly basis.
Inflation pressures also cooled with the personal consumption expenditures price index increasing 3.2%, down from 4.8% in Q3.
The slowdown in GDP growth from Q3 to Q4 was largely driven by lower residential fixed investment which plunged 26.7% as the housing market slowed.
Exports also declined 1.3% in the quarter.
Tesla Beats Q4 Expectations
Tesla (TSLA) shares are rallying 8.8% ahead of the open after reporting record revenue in Q4 and beating earnings expectations.
Here’s how the electric automaker’s results compared to analysts’ estimates:
- Adjusted EPS: $1.19 vs $1.13 expected
- Revenue: $24.32 billion vs $24.16 billion expected
Automotive revenue jumped 33% year over year but gross margins came in at 25.9%, the lowest figure in five years.
Tesla blamed those smaller margins on lower sales prices, saying average sales prices have “generally been on a downward trajectory for many years”.
The company most recently cut prices on its cars in the U.S. and China in late 2022.
IBM Sales Top Estimates
IBM (IBM) shares are slipping 2.2% in premarket trade despite reporting better-than-expected sales in the fourth quarter.
Here’s how the company’s results compared to analysts’ estimates:
- Adjusted EPS: $3.60 as expected
- Revenue: $16.69 billion vs $16.4 billion expected
IBM’s total revenue was flat year over year, beating expectations for the first decline in two years.
For the full year, the company’s revenue jumped 6% to $60.5 billion.
IBM reiterated its previous forecast for 2023 revenue growth in the mid-single digits, suggesting a total of about $63.5 billion vs $60.8 billion expected.
The company is projecting $10.5 billion in free cash flow this year vs $11.1 billion expected.
American Airlines Beats Earnings Estimates
American Airlines (AAL) shares are up 1.9% ahead of the open after beating Q4 earnings estimates.
Here’s how the airline’s results compared to analysts’ expectations:
- Adjusted EPS: $1.17 vs $1.14 expected
- Revenue: $13.19 billion vs $13.20 billion expected
Revenue jumped 16.6% compared to the same quarter in 2019 as travelers paid higher fare prices.
That revenue total was a new record for the company despite operating 6.1% less capacity than Q4 2019.
American brought in $127 million in net income for all of 2022, its first full-year profit since 2019.
The carrier forecast Q1 capacity will be 8% to 10% higher year over year.
Southwest Reports Worse-Than-Expected Q4 Loss
Southwest Airlines (LUV) shares are dropping 2.6% in premarket trade after reporting a steeper Q4 loss than expected.
Here’s how the carrier’s results compared to analysts’ estimates:
- Adjusted loss per share: $0.38 vs $0.12 expected
- Revenue: $6.17 billion vs $6.16 billion expected
That loss was driven by the mass cancellation of about 16,700 Southwest flights between December 21 and December 31.
The company said it expects that meltdown to continue weighing on its bottom line in Q1.
Southwest said it expects to post another loss in Q1, sharply missing analysts’ expectations for a profit of $0.19 per share.
The airline reported a $529 million profit for the full-year 2022, down 45% from a year earlier.
Key Earnings After The Close
Here’s a look at the companies set to report earnings after the close today:
- Intel (INTC)
- Visa (V)