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Subscribe →July 31, 2020
Stocks – FB, AMZN, MSFT, GILD, AAPL, 700
Macro – SPY, QQQ, EWJ,
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- Downward Trend Are Still In Place
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWNS AAPL AND MSFT
Stocks are rising following the “strong” quarterly results last night. But the results in some cases were misleading because expectations had been reduced so greatly. For example, Facebook delivered better than expected revenue and earnings, but revenue growth was just 11% there slowest growth rate in many quarters. At the same time, Analysts had been looking for revenue in the first quarter of $20.3 billion at the beginning of March, and it declined to $17.4 billion, a drop of 14.2%.
Meanwhile, Apple saw its revenue estimates drop from about $59.8 billion to $52.2 at the end of March, a drop of 11.1%. Simply put, both companies beat severely reduced expectations, and without providing any guidance, it, in my opinion, dilutes the appearance of what are strong results. Not to mention Apple had more iPad and Mac sales this quarter then they did in many quarters. Is it repeatable? Probably not, everyone was running out and getting their kids iPads and Laptops in April when they were ordered to home school. I had to buy two laptops.
The only one of the four that delivered strong results, sort of was Amazon, because analysts were actually raising their revenue numbers into the results, and Amazon still beat those numbers. But then again, AWS’s revenue growth fell to 29% its slowest growth rate ever.
So while Microsoft delivered blockbuster results, the stock has suffered because Azure grew below 50%, at 49%, and since reporting results, the shares have fallen by 5%. Microsoft was even punished for giving mostly inline guidance. But yet, Apple and Facebook provided no guidance, and the stocks are rising? Make no sense to me. The bottom line, I’d be careful with this setup this morning and would be curious to see where they close. Probably lower, then where they start.
Remember Tesla? So be careful. Again, 81% of S&P 500 companies have smashed their estimates in the second quarter, and that is because these massive beats are coming on watered-down results from companies that gave no guidance. If anything, it tells you just how bad analysts are at forecasting results without guidance.
Look, I own Apple and Alphabet, but I also so own Tesla and Microsoft, so are the big moves frustrating for me to see. Yes.
Amazon (AMZN)
I would watch Amazon closely; it needs to push through 3,275 this morning.
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Facebook (FB)
Facebook will need to close above $250 today.
Nikkei
Meanwhile, the Nikkei didn’t care much about the big tech’s significant results. The index was smoked down 2.8% and fell below some essential support at 21,980. A strong yen is not going to be helpful for Japanese equities.
Tencent
Even Tencent didn’t get a boost, falling by 20 bps.
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S&P 500 (SPY)
Meanwhile, we will see if the S&P 500 futures can push through resistance at 3,272.
Nasdaq (QQQ)
Meanwhile, the NASDAQ 100 futures are failing to make a new high, and topping out at the lower high they made last week.
Gilead (GILD)
Anyway, poor Gilead is trading lower because it missed estimates all around. But then again it didn’t get the same love when it came to reductions, only with revenue estimates falling to $5.3 billion from $5.6 billion, a reduction of just 7%. Man, if they had only gotten the same love as Facebook. They could have crushed it too. Anyway, now the stock is likely on its way to $67.
Nobody ever said investing was fair.
-Mike
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.
This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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