ONn important week in the second quarter reporting season that has just ended, in which tech giants like Tesla (TSLA), Google (Goog , GoogL), Apple (AAPL), Facebook (FB) and Microsoft (MSFT), among other things, dispelled any doubts that they can maintain their dominance. And although Amazon (AMZN) didn’t disappoint, with second-quarter revenue increasing 27% to $ 113.1 billion from $ 88.9 billion a year ago, while earnings per share rose 47% to 15.12 in the second quarter $ 10.30 a year ago was up $ 10 per share.
Nonetheless, Amazon’s loss of revenue in the second quarter was partially blamed for why stocks closed lower on Friday. Amazon stock ended the session 7.5% lower, adding 105.59 points to the Nasdaq Composite Index dropping 0.7% to end the session on Friday at 14,672.68. After making a brief intraday high, the Dow Jones Industrial Average gave up 149.06 points, or 0.4%, to close at 34,935.47. The S&P 500 index lost 23.89 points, or 0.5%, to close 4,395.26.
Aside from Amazon’s results, the declines – which also resulted in a weekly loss for all three averages – were driven by fears over rising cases of the delta variant of the coronavirus. But there is also a half way of looking at things. At the start of the quarter, concerns were raised not only about how expensive and overbought these tech stocks are, but that reopening the economy would be somewhat “disruptive” to their businesses. That was not the case.
Instead, we learned this week that many (if not all) of these tech giants were focused on doing what they’re good at, which is enabling e-commerce, cloud services, and digital adoption. It is certainly early days and half the profits of S&P 500 companies remain. But the upward forecasts are encouraging. The strong growth in online advertising from Facebook, Google and Twitter (TWTR) and snap (SNAP).
Will the strong growth trend continue throughout the second quarter reporting season? That remains to be seen. Average GDP growth of 9.3% is expected for the second quarter. As noted earlier, corporate forecasts released so far not only support higher valuations, but also give reason for optimism that Friday’s price decline may just be a temporary pause in a rally that has many more highs to come by the end of this earnings season.
As for earnings, here are the stocks I’ll be watching this week.
Alibaba (BABA) – Reports before the opening, Tuesday, August 2nd
Wall Street expects Alibaba to make $ 2.24 per share on revenue of $ 32.54 billion. Compared to the same quarter last year, earnings per share were $ 2.21 on sales of $ 22.23 billion.
What to Note: Alibaba stock continues to trade at a discount despite the fact that the company has shown high-growth and highly profitable traits in line with its American FAANG counterparts who enjoy top-rated valuations. Since the start of the year, stocks are down more than 50% due to a combination of factors. Aside from fears about the company’s corporate governance that sparked government investigations, there are growing concerns that the company is rocky political position in China can hinder future growth. Is Now a Good Time to Buy? The number of active consumers was 811 million in the fourth quarter, an increase of 32 million year over year. Meanwhile, the company’s monthly active users hit 925 million in March, up 23 million from December 2020. Investors want to know: What does it take to revive these stocks? With the stock currently being valued at an all-time high, the company will have to give investors reason to believe on Tuesday that the stock has significantly more leeway and can remain on a sustainable recovery path.
Nio Limited (NOK) – Reports after close of trading Tuesday, August 2
Wall Street expects Nio to post a loss of 11 cents per share on sales of $ 1.28 billion. This compares to the same quarter last year when the company posted a loss of 18 cents per share on sales of $ 550.47 million.
What to Watch for: NIO stocks have been under pressure for the past six months, falling more than 25% compared to the S&P 500 Index’s 19% rise. This despite the fact that the Chinese electric vehicle manufacturer is fighting to become the next Tesla (TSLA) achieved a four-digit return in the past year. In addition, the company no longer has liquidity shortages and has reported record deliveries for six consecutive months. But while there are no signs of slowing, China’s tightening regulatory environment is putting Nio’s massive growth rate at risk. Analysts have become more cautious about overall EV ratings, which could suffer if the outlook for China deteriorates. For Nio, which sold 8,083 vehicles in June, an impressive 116% growth, that is still a small fraction of the 1.3 million electric vehicles sold in China in 2020. This means that there is still market share to be had in China where EV sales continue to rise. On Tuesday, the company can allay valuation concerns by delivering a sales and bottom line hit along with a strong delivery forecast for the next quarter and full year.
Year (YEAR) – Reports after close of trading, Wednesday, August 3
Wall Street expects Roku to make 12 cents a share on sales of $ 618.54 million. Compared to the same quarter last year, the company lost 35 cents per share on sales of $ 315.43 million.
What to Remember: Can Roku Maintain Its Historic Growth Rate? The digital media device maker has benefited from the video streaming industry, which has grown rapidly in recent years. And thanks to the continued abandonment of traditional media, the industry, which has generated a record number of new signups, has not only gotten through services like Netflix (NFLX), but also Apple’s (AAPL) Apple TV +, Disney’s (DIS) Disney + Platform and Time Warner’s (TWX) HBO max. Not only does these services benefit Roku, which sells streaming devices to customers, but Roku is underscoring its platform growth in subscriptions and advertising dollars that are shifting from linear television to streaming. Analysts have praised these moves, which aim to unlock years of consistent growth. Revenue growth of 80% last quarter and earnings growth of 132% underscore the strength of the company. On Wednesday, the company must do its part to demonstrate further value.
Modern (MRNA) – Reports before the opening, Thursday 4th August
Wall Street expects Moderna to make $ 6.04 per share on sales of $ 4.28 billion. This compares to the prior-year quarterly loss of 31 cents per share on sales of $ 66.35 million.
What to Keep in Mind: Investors looking for healthy returns have surely flocked to Moderna. And it was well worth it. With its rapidly produced and highly effective coronavirus vaccine, Moderna stock has soared 231% year-to-date, knocking down the S&P 500 index’s 18% surge. As a result, Moderna’s valuation rose to nearly $ 130 billion, making it one of the largest biotech stocks in the market. But while that rating may seem exaggerated, the delta variant of the coronavirus continues to rise in several states. As a result, the company’s sales and estimates have also increased. In the last thirty days, the EPS estimate for the past quarter has risen by more than 4% to currently USD 6.01 per share, which reflects a growth of more than 2000% compared to the previous year. Revenues in the second quarter are expected to be 4.29 billion US dollars, 6368% more than in the same quarter last year. In other words, there are heaps of high expectations tied to MRNA stock, which some analysts believe could be worth more than $ 1 trillion by 2030. Investors are excited to see what the company said on Thursday about its growth expectations for both close time and long term.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.