Big Turnaround for Twitter, But Other Technology Stocks Tumble: Earnings This Week

Big Turnaround for Twitter, But Other Technology Stocks Tumble: Earnings This Week

Twitter’s flying on strong user growth, but results from other technology stocks haven’t been so hot in the last week.

TWTR reported better-than-expected revenue and rapid traffic growth. The big number was 152 million monetizable daily active users last quarter, 4.5 million more than forecast.

Investors saw the report as evidence that CEO Jack Dorsey is successfully boosting relevance to engage viewers with ads. That let them forgive a profit miss, higher costs and weak sales guidance.

TWTR rebounded from a big drop the previous quarter, spiking 18 percent. It’s the stock’s biggest gain since October 2017.

Other technology stocks took a beating — especially those with a social-media theme.

Twitter (TWTR) chart with 50- and 200-day moving averages.
Twitter (TWTR) chart with 50- and 200-day moving averages.

Snap (SNAP) fell the most, down more than 10 percent in the last week. Its results were pretty much the opposite of TWTR’s, with the top line missing and monetization dwindling. SNAP collected just $2.58 per user last quarter, while analysts had expected $2.62.

Pinterest vs. Snap

The news also followed a January 14 report in eMarketer that Pinterest (PINS) had overtaken SNAP as the third-biggest social-media platform in the U.S. TWTR is No. 2 behind Facebook (FB), which reported last week.

Peloton (PTON) and Match (MTCH) also fell on weak results. PTON slipped after losing more money than feared and growing revenue less quickly than hoped. The maker of high-end exercise bikes, also struggled with higher “churn,” or customer attrition.

MTCH’s problem was slowing growth for Tinder, its most important app. Earnings and revenue also missed.

Ford Crashes

Another big story last week was the crash in Ford Motor (F). The 116-year old carmaker plunged to its lowest level in almost a year amid a slew of problems:

  • Earnings of $0.12 per share, below the $0.15 estimate.
  • Higher costs to develop self-driving cars and provide warranties.
  • Higher costs from launching its new Explorer SUV.
  • Lack of guidance, which made investors assume the worst.

Interestingly, F has become one of the busiest symbols among TradeStation clients. It ranks No. 4 so far this month, up from No. 7 in January and 214th in December. Its swelling popularity comes at the same time as a huge rally in Tesla (TSLA).

Ford Motor (F) chart with 50- and 200-day moving averages.
Ford Motor (F) chart with 50- and 200-day moving averages.

There seems to be a historic shift underway. Electric-vehicle maker TSLA has emerged as a major U.S. automaker, and will probably join the S&P 500 soon. Meanwhile, capital is shifting away from F and General Motors (GM).

Health Care Stocks Rally

Several health-care stocks rallied on strong earnings and other positive news.

Regeneron Pharmaceuticals (REGN) is up 15 percent in the last week. Most of the rally came on news of the biotechnology company working with the U.S. government to develop a cure for coronavirus. It also reported better-than-expected earnings and revenue this morning.

Cardinal Health (CAH) ripped 12 percent today, its biggest gain in at least a decade. The distributor of drugs and medical products beat forecasts and raised guidance thanks to cost cuts. It was a big relief for a company that fell last year on worries about increased regulation.

Health-care IT company Cerner (CERN) jumped on strong results. Analysts at Baird, CFRA and Canaccord Genuity also raised their price targets.

Health insurer Cigna (CI) also beat estimates after cutting costs. Drug maker Bristol-Myers Squibb (BMY) benefited from its recent acquisition of Celgene.

Alphabet, Disney, Qualcomm

Three other major firms reported earnings in the last week. However none of them moved much.

Alphabet’s (GOOGL) missed earnings and revenue estimates. The search giant changed its as management started disclosing numbers for divisions like YouTube and cloud computing. The big story going forward will be Sundar Pichai’s execution and strategy now that he’s running the entire company.

Walt Disney (DIS) beat earnings and revenue estimates. But it mostly drifted after failing to raise subscriber guidance for its Disney+ service. That’s the main item on investors’ minds right now.

Semiconductor company Qualcomm (QCOM) chopped in a range. Its results were strong, but management warned coronavirus could slow business. Investors are looking for the 5G networking boom to drive growth QCOM over the longer-term.

But in the near-term, they’re more focused on a Federal Trade Commission legal case. (A court hearing is next Thursday, February 13.)

In conclusion, TWTR had the biggest upside surprise in the last week of earnings. F had notable bearish activity. Several health-care companies showed signs of rebounding from big worries about political risk.

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