Coffee With Greta: Traders Face the Earnings Flood
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DJIA Futures: +220 (+0.7%)
SPX Futures: +14 (+0.3%)
NASDAQ Futures: +25 (+0.2%)
Good morning friends!
Futures are rebounding as traders digest a flood of big Q1 earnings.
Let’s get right to it!
Alphabet Tumbles on Earnings Miss
Alphabet (GOOGL) shares are falling 4.3% ahead of the open after missing Q1 profit and revenue expectations.
The Google parent company reported earnings of $24.62 per share on $68.01 billion in revenue.
That missed analysts’ expectations for EPS of $25.91 on $68.11 billion in revenue.
Overall revenue rose 23% year-over-year, down from 34% growth in Q1 2021.
YouTube advertising revenue came in short of analysts’ expectations at $6.87 billion while Google cloud revenue beat estimates at $5.82 billion.
Traffic acquisition costs were higher than expected at $11.99 billion.
Alphabet’s board authorized $70 billion in share buybacks for 2022.
Microsoft Tops Fiscal Q3 Expectations
Microsoft (MSFT) shares are up 3.8% in premarket trade after beating fiscal Q3 expectations across the board.
The tech giant reported adjusted earnings of $2.22 per share on $49.36 billion in revenue.
That topped analysts’ expectations for adjusted EPS of $2.19 on $49.05 billion in revenue.
Revenue rose 18% year-over-year, down from 20% in the previous quarter.
Sales and marketing costs rose 10% year-over-year to $5.6 billion.
Microsoft benefited from higher prices on some of its Office 365 productivity software subscriptions in the quarter.
General Motors Q1 Sales Fall Short
General Motors (GM) shares are up 1.5% ahead of the open after mixed Q1 results.
The automaker reported adjusted earnings of $2.09 per share versus analysts’ expectations for $1.68.
But GM’s $35.98 billion in revenue was short of expectations for $37.01 billion
The company hiked its full-year net income forecast to between $9.6 billion and $11.2 billion.
GM also raised its full-year adjusted earnings outlook to between $6.50 and $7.50 per share, as it increased its ownership stake in its Cruise autonomous vehicle unit.
The automaker still plans to produce 25% to 30% more vehicles this year compared to 2021.
Chipotle Benefits From Price Hikes
Chipotle Mexican Grill (CMG) shares are up 4.6%in premarket trade after beating Q1 expectations.
The restaurant chain reported adjusted earnings of $5.70 per share on $2.02 billion in revenue.
That was better than analysts’ expectations for adjusted EPS of $5.64 on $2.01 billion in revenue.
Same-store sales rose 9% year-over-year versus Wall Street’s expectations for 7.9%.
Chipotle said higher menu prices helped offset rising costs for beef, avocados, paper, and labor last quarter.
The company did not provide full-year guidance but said it expects same-store sales growth between 10% and 12% in Q2.
Boeing Falls on Weak Q1
Boeing (BA) shares are down 3.8% ahead of the open after reporting a steeper than expected Q1 loss.
The plane maker reported a core loss of $2.75 per share on $13.99 billion in revenue.
That was worse than analysts’ expectations for a core loss of $0.27 per share on $16.02 billion in revenue.
Revenue was down 8% compared to Q1 2021.
Boeing struggled with production delays during the quarter.
The company announced it is pausing production of its 777X plane through 2023 which will create $1.5 billion in abnormal costs starting this quarter.
Boeing is ramping up its 737 Max output to 31 planes a month in Q2 after delivering 95 in total in Q1.
Spotify Drops Despite Strong Subscriber Growth
Spotify (SPOT) shares are down 6.4% in premarket trade despite reporting strong subscriber growth in Q1.
The streaming giant reported earnings of €0.21 on €2.66 billion in revenue.
Analysts were expecting a loss of €0.23 per share on €2.8 billion in revenue.
Monthly active users jumped 19% year-over-year to 422 million, topping its own expectations by about 1 million.
Spotify said that number included 3 million users who were logged out during a service outage and created new accounts.
Premium subscribers rose 15% to 182 million.
The company forecast 428 million monthly active users in Q1 and 187 million premium subscribers.
That forecast includes an expectation to lose 600,000 more subscribers once it fully shuts down its business in Russia.
Robinhood Fires 9% of Workforce
Robinhood (HOOD) shares are down 4.5% ahead of the open after announcing it will fire 9% of its full-time employees.
CEO Vlad Tenev made that announcement in a blog post Tuesday evening.
Tenev said the company’s rapid expansion over the past two years led to “some duplicate roles and job functions”.
Robinhood is scheduled to report Q1 earnings after-hours tomorrow.
Lucid Rallies on Saudi Deal
Lucid Group (LCID) shares are up 4.3%in premarket trade after announcing a sales deal with Saudi Arabia.
The electric automaker reached an agreement to sell up to 100,000 vehicles over a 10-year period to the Saudi Arabian government.
The deal includes an initial commitment for 50,000 Lucid Air vehicles.
Lucid’s CEO called it “another pivotal moment in our acceleration of sustainable transportation worldwide”.
Tesla Tumbles After Twitter Accepts Musk Buyout
Tesla (TSLA) shares fell 12.2% Tuesday after Twitter (TWTR) accepted CEO Elon Musk’s $44 billion offer to buy the social media company.
That drop wipe $126 billion off the electric automaker’s market cap.
Part of the funding for that buyout includes a $12.5 billion margin loan against Musk’s Tesla stock.
Although Musk is the richest person in the world, much of his wealth is tied up in TSLA.
Musk will now be in charge of Tesla, Twitter, SpaceX, the Boring Company, and Neuralink.
He’s made it clear he wants to heavily influence the day to day operations at Twitter.
Tesla is also still struggling to resume production at its factory in Shanghai, China.
TSLA shares are up 0.6% ahead of the open.
Pending Home Sales Preview
The National Association of Realtors reports pending home sales for March at 10:00 a.m. ET.
Economists are expecting that report to show a 1.8% decline in the number of contracts signed to purchase a home last month.
Pending sales are a forward looking indicator for the housing market as they represent contracts signed for sales expected to close in 30 to 60 days.
In Case You Missed It
- Consumer confidence fell unexpectedly in April. The Conference Board’s Consumer Confidence Index fell to 107.3 this month from 107.6 in March. That sharply missed expectations for the index to rise to 108.5. Confidence in current economic conditions fell to 152.6 while the expectations index improved to 77.2.
- The Census Bureau reported new home sales tumbled 8.6% in March to a seasonally adjusted annual rate of 763,000 units. That was a sharper decline than economists had expected. New home sales were down 12.6% year-over-year. The median price of a new home sold in March jumped 21.4% annually to $463,700.
- U.S. home prices are still rising at a breakneck pace. The S&P CoreLogic National Home Price Index jumped 19.8% year-over-year in February. That’s the third fastest pace of price growth on record. The 20-city index surged 20.2% while the 10-city index rose 18.6%.