This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
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Michael Kramer and the clients of Mott Capital own Microsoft, Tesla, Visa, and Disney,
Michael Kramer owns IWM Calls
S&P 500 (SPY)
Stocks finished the day flat. The small-caps were the best performing group rising by about 25 basis points to close at 1,588. I think it is positive that the overall the market held on to the big gains from yesterday.
Earnings tonight looked very strong out of Facebook, Microsoft, Visa. It will likely lead to a rally tomorrow; I don’t see how it can’t given the heavy weighting the stocks have in the market.
Additionally, the Russell finished the day right around resistance at 1,593, and nearly broke out but failed on the first attempt. The good news is that the index managed to hold above 1,887.
Microsoft rose to nearly $130 following results. The company crushed the bottom line, posting 20% growth and earnings of $1.14, better than estimates of $0.99 per share. Revenue also came in better at $30.5 billion versus estimates of $29.86 billion. Cloud service revenue grew 27%, and Azure revenue jumped 73%. At this point, I have to figure out where the stock is going, but it is trading well above my $127.50 target. If this pace of earnings growth keeps up, the stock may be too cheap at 25 times 2020 estimates. This Is Why Microsoft May Rise After Quarterly Results
Facebook (FB )
Facebook is trading over $196 after earnings, a break above this level sends the stock to $204. The company also beat on the top and bottom line, no surprise. Facebook’s Stock May Surge Following First Quarter Results
Visa had a good quarter too, beating and reaffirming its outlook. But in typically post-earnings fashion the stock traded down. This what happens every quarter, every time. No matter what the results.
Tesla reported results that fell short on both the top and bottom lines by a wide margin. I think it was widely expected this quarter would be a disaster. But the company kept guidance for the full-year production of 360k to 400k. Also, they said this they expect to deliver between 90,000 and 100,000 vehicles in Q2. I think that is likely the reason the stock is trading flat follow the results. For now, the stock is holding $251.
I had noted in a premium article this week that sentiment was so bearish I thought the stock could bounce to $300 following results. I guess we will see. Tesla May Rise Following Results
When looking at AT&T a bit closer today, their media unit seems to be doing very poorly. I went through it a bit in a video today. But I was shocked to see the losses on DTV subs, and declining revenue in HBO and Turner. I had thought this stock would rise following results, and it still may, but I don’t see how. AT&T’s Quarterly Results May Give Shares A Needed Boost. The stock is like a train wreck.
Disney, Qualcomm (DIS, QCOM)
I noticed some more call buying Disney today, which suggests the stock rises to around $138, while Qualcomm could move to about $96 – Disney, AT&T, Domino’s, Qualcomm, The Dollar
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 results.