Subscribe to The Free Market Chronicle and join the 2,683 subscribers getting it for FREE!

Apple

You just have to wonder how they do it. The amount by which Apple beat estimates, which was nearly $2 billion, almost 3.6 percent seems insane. Analysts were looking for $50.71 billion, according to Ycharts, Apple reported $52.58 billion. Look at the growth rates; the America’s saw revenue growth of 14 percent, Europe 20 percent – Europe!. China grew by 12 percent. These aren’t year-over-year growth rates off a tiny base. America’s revenue increased to $23.099 billion, Europe to $13.00 billion, and China to $9.8 billion. Huge.

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column][vc_tweetmeme type=”follow” follow_user=”michaelmottcm” show_followers_count=”true” large_button=”true”][/vc_column][/vc_row] Get This In Your E-Mail Subscribe

So much for there being no iPhone demand. Apple only sold 46.6 million units in the quarter, a rise of 14 percent sequentially, and 3 percent year-over-year.

Then, of course, the guidance for the first quarter, tremendous. Apple is looking for revenue of $84 to $87 billion, and at the mid-point, that is revenue of $85.5 billion. Wall Street consensus estimates were at $84.60 billion.

What about those rumors? No iPhone demand, production issues? It seems like there is no problems based on these numbers.

AAPL Price data by YCharts

[poll id=”8″]

Starbucks

Then there is Starbucks, a once mighty flyer that has had its wings clipped. The company reported earnings of $0.55 in line with estimates. Revenue came in $5.698 billion, while estimates were looking for $5.807 billion.

If the results themselves weren’t bad enough, Starbucks then gives these long-term targets, why companies do this is beyond me. It either sets expectations that are too high, think Celgene. Or it sets them at levels the street doesn’t want to see, think Starbucks. Annual Global Comparable Sale of 3-5 percent, revenue growth of high single digits, earnings growth of 12 percent or higher, who wants to hear these things. These aren’t growth numbers; these are we are either setting the bar low to beat, or we are no longer a growth company, so don’t value us that way anymore.

Meanwhile, Starbucks guided the full-year 2018 EPS to a $2.30 to $2.33, shy of consensus of $2.35, while revenue is expected to grow in high single digits. Even at a 9 percent growth rate, revenue would come in at $24.40 billion, based on 2017 revenue of $22.39 billion, consensus was looking for $24.75, according to Ycharts. Disappointing all around.

The stock is currently trading at 19 times 2019 estimate of $2.70, which will likely have to be lowered slightly, but still it is expected growth of about 15 percent, which certainly doesn’t make the shares overvalued, that is the one saving grace here. But to get shares moving higher, two things need to happen. The market needs to give the stock a higher multiple, which seems unlikely to happen, or the company needs to grow earnings faster.

[poll id=”9″]

Premium Content: Benefits include the ability to reach out to Mike with questions through a chat room, direct message, or comments.

Cracking The Productivity Mystery

Productivity Issue In One Chart

Qualcomm Has Big Problems

Facebook, Alibaba, Apple Earning Preview

What Good Are The Analyst Worth!

Dollar Breakout, Bad For Euro

Tesla

Tesla shares fell far more than I would have expected, but part of that could also be attributed to the ending of the electric vehicle subsidies. But that could be viewed as a positive in a way. Why? Because first, the limit is on the first 200k cars, which Tesla is already pretty close too so that subsidy would have gone away, regardless. The other point is that now all the auto companies coming out with their version of electric cars won’t receive that benefit that helped Tesla to get its feet on the ground.

But the truth of the matter, how many people buying a $100k are car going to decide to choose a Tesla over a Mercedes because of the subsidy. Chances are at that price range it is a nice option to have but, likely not driving the ultimate decision. Second, the subsidy was never really going to benefit Model 3 owners anyway, because like we said earlier it was ending anyway.

Interestingly, Tesla Zero Electric Vehicle credit sales in the quarter were less than $1 million. In the prior quarter, they were $100 million.

As for the trading of the stock, there is so much day-trading in the name, it is impossible to tell at this moment were shares are going. The one positive is that the stock didn’t close at the lows of the day, and it tried very hard to hold $300.

Let see where it is in 3-days time when the day traders find another stock to day-trade. Nvidia is reporting soon.

Free Articles Written By Mike:

Chipotle Shares Could Fall 20 Percent Further

Broadcom’s Raised Forecast Is Great News For Chip Stocks

Starbucks 4Q Earnings Could Surprise Investors

Apple Shares Are Set Up For Post-Earnings Fall

Apple’s Chip Suppliers Are Breaking Out

Amazon, Alphabet And Microsoft Simply Crushed It

Why Mastercard’s Stock Could Rise 15%

Why Amazon’s Earnings Aren’t As Strong As They Look

Qualcomm Deal With NXP Will Eventually Get Done – M…

Celgene and Biogen May Be Signalling A Biotech Bottom

AMD Could Rise 10% Despite Results, Trades Indicate

Why Tesla’s Stock Is Breaking Down

Why Is McDonald’s Valued Like a Big Tech Stock?

Why Biogen May Sink Biotech Sector As Earnings Beat

Netflix Stock Likely to Rise as EPS Estimates Jump

Bank of America Could Rise Nearly 50%: Technical Analysis

AMD Could Break Out After Results

Qualcomm’s Bid For NXP Still Lacks Investor Support

Celgene’s Sharp Sell-Off Is Likely Overdone

Procter & Gamble Continues To Have Two Big Problems

GE: Getting Excited For The Future

Why IBM’s Big Stock Rally Won’t Last

Allergan Shares On The Verge Of Further Breakdown

We offer a lot of great commentaries all week talking about the major and relevant market events. Be sure to subscribe to get this all and of all free commentaries sent directly to your inbox or follow us on Twitter.

-OR-

Michael Kramer and the clients of Mott Capital own shares of TSLA, CELG, SBUX

Photo Credit via Flickr

Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.