Wall Street Is Wrong! – Earnings Reports

crop payroll clerk counting money while sitting at table

The last 2 weeks major companies have reported their quarterly earnings reports. These include Facebook, Apple, Amazon, Microsoft, Tesla, Google, Qualcomm, Visa, and so many more.

For those who dont know, every quarter a company must report their income, balance sheet, growth, etc. Top Wall Street analysts will set expectation numbers that these comapanies should achieve. Whether they hit them or not helps determine where the stock will move, and helps better understand how well a company is growing.

This quarter companies have blown their numbers out of the water!! Beating expectations… by A LOT Wall Street is wrong this time around.

Apple ($AAPL)

Apple reported Wednesday 4/28.

  • Revenue of $90 billion vs. expected $77 billion.
  • Earnings Per Share of $1.40 vs. expected $.99
  • Gross Margin 42.5% vs expected 39.8%
  • Iphone revenue of $48 billion vs. expected $41.5 billion.
  • Raised divendend by 7%

Apple is the largest company in the stock exchange, we all know why. No surprise Apple has proved themselves again. Apple stock is little changed due to earnings. Some say it’s because Apple is wary of slowed chip growth for the future. In the long run this wont matter, but the blow out earnings will.

If you invest your money here, you will grow your money no questions asked.

Microsoft ($MSFT)

Reported Tuesday 4/27

  • Earnings Per Share of $1.95 vs. expected $1.78.
  • Revenue of $41.71 billion vs expected $41.03 billion.
  • Revenue growth of 19% year over year.

Similar with Apple, Microsoft is another proven company. They continue to expand into new fields like cloud computing and AI. Their stock is also little changed, but dont think it is a big deal. It is Wall Street worried that these inflated numbers are due to coronavirus lockdowns, and aren’t sustainable. In the long run, this wont matter at all.

Qualcomm ($QCOM)

Reported Wednesday 4/28

  • Earnings Per Share of $1.90 vs expected $1.67.
  • Revenue of $7.93 billion vs. expected $7.62 billion
  • Revenue growth of 52% year over year.

Qualcomm is a stock that I believe gets no credit and is often overlooked. They are doing way more than you may think.

In summer 2020 Qualcomm replaced Intel as Apples #1 chip provider. Mid-major news at the time, but now no one seems to know just how big that partnership actually is.

A top 5 company in 5G development. Expanding networks all around the country for the future. This is an excellent growth opportunity for the company and it’s investors. This is the main reason I hold Qualcomm, for the 5G exposure.

Tesla ($TSLA)

Reported Monday 4/25

  • Earnings Per Share of $.93 vs. expected $.79 cents.
  • Revenue $10.39 billion vs. expected $10.29 billion.
  • Revenue up 74% year over year
  • Gross Income of $438 million
  • $101 million in profit from bitcoin transactions
  • Recorded record sales of Model 3 and Model Y vehicles.
  • Expects vehicle growth to grow 50% by the end of 2021

Tesla has beaten the odds so many times throughout the last 5 years. They are going on 2 years being profitable when so many said they never would would be. Elon Musk is slowly making Electric Vehicles a new normal for our world.

At this point, it is riskier to not hold Tesla in your portfolio, than to hold it in my opinon. What can hurt you is getting in at the wrong price. Often times people buy into Tesla when it runs up, never do this. Buy when everyone is doubting and when it falls big. I know I’ll be buying.

Spotify ($SPOT)

Reported Wednesday 4/28

Spotify is one that missed expectations, not by a lot however.

  • Monthly active users grew 25% since same time last year.
  • Missed user expectations. Reported 354 million vs. expected 365 million.
  • Growth in podcast listening hours.
  • Decreased guidance expectations.

Wall Street was expecting higher user numbers this quarter. That is why the stock is down significantly. I believe Wall street may have been wanting a larger user growth number due to pandemic lockdown situations. Spotify also gave lower guidance expectations for the rest of the year.

All in all, Spotify still reported year over year growth. As well as growth in other areas. But Spotify does need these big user numbers to prove themselves, since they are not a high profit company yet. I know I said I liked Spotify’s price over a month ago, but now I think they will go lower.

I still really like the products and services of this company though. They are one of the very few companies that competed with Apple, then went on to top them in some way. That being podcasts services. Long-term I really like this company, but lack of user growth and lack of different content can hurt them in the short term. If their dip is big enough, I will most likely scoop up a few shares.

More Noteable Reports

  • Google MASSIVELY beat earnings.
  • Amazon beat expectations.
  • Facebook record numbers.
  • Starbucks mixed feelings, but does report higher expecations in the coming months as reopenings begin.
  • UPS reports great numbers.
  • Catepillar on top.

What This Means Going Forward

Companies have proven themselves tremendously this time around. As uncertainty is still lingering, this hopefully decreased some of it. Moving forward though, how companies respond and report to the reopening of cities from the lockdown will be key. Can companies get back on their feet? Will they do better than expected? Key answers we need in the coming months.

Right now stocks are dipping even though they reported great numbers. The immidiate days after earnigns reports never tells the full story. Volatility is always higher, and everyone is on edge.

Some say Wall Street is now in fear that these high numbers are not sustainable once reopenigns happen. The companies that benefited from the lockdown have felt this reaction in their stock price.

As retail investors we must ride the waves of the market and analyze what we know. Buy dips, see how our holdings are reporting, what changes our companies are making, find other opportunities that are out there.

All date per https://www.cnbc.com/


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