As we dive into the busy week of U.S. earnings season, Apple, Facebook, and Tesla are all set to report their earnings this week. Let’s take a closer look at how the earnings of these companies have fared amidst the pandemic chaos.
Investors across the globe look forward to the week of U.S. earnings season, as it uncovers earnings of the top players of the Silicon Valley. The week unravels major business stories of some of the biggest companies, including Apple, the most powerful social media giant Facebook, the largest carmaker by market value, Tesla, to name a few.Â
Apple, Facebook, and Tesla were each expected to deliver record numbers, and the market closure results of Wednesday revealed that all three lived up to their expectations. Despite the record-breaking results, the investor community was left unimpressed. The investors were largely dissatisfied as all three companies saw their shares slide in after-hours trading. As the numbers go, Facebook shares are down 2%, Apple is down 3%, and Tesla lost about 5%.Â
In the overnight trade, it was observed that Apple stock fell modestly after closing in a range above a buy point, while Facebook stock and Tesla stock retreated.Â
Apple Earnings
As Apple saw an uptick in higher-end iPhone sales and a pandemic-induced surge in demand for its laptops and tablets, it was successful in turning the quarter into the most profitable quarterOpens a new window ever.
Apple earningsOpens a new window  climbed 34% to $1.68 a share, while its revenue rose 21% to 111.43 billion, at the backdrop of the surge in demand for iPhones, wearables, and services. Analysts at Wall Street expected Apple earnings of $1.41 a share on sales of $103.28 billion. However, Apple performed better than what was realistically forecasted.
Yet, in the extended trade, Apple stock sank 3% to 137.50, while at the same time shares dipped 0.6% to 142.06 in the regular session.Â
Apple Inc. Stock
Source: Investor’s Business DailyOpens a new window
Tesla Earnings
Tesla was fully supported by the growing demand for electric cars as it reported its first full-year profitOpens a new window . Yet, the supply-chain costsOpens a new window  pulled profit for the October-December quarter short of analysts’ expectations.
Tesla earningsOpens a new window  grew 95% to 80 cents a share, thereby weighing down by higher-than-expected stock compensation. Revenue shot up 45% to $10.74 billion. According to Zacks Investment Research, analysts expected Tesla earnings of 90 cents a share on sales of $10.13 billion. Other estimates had Tesla earnings at just over $1 a share.
Regulatory credits revenue, which is expected to decline sharply, tripled to $401 million. Gross margins excluding credits were 20.7%, far below views for 24.2%.
As 2020 was dominated by price cuts due to the pandemic, the average selling price for Tesla vehicles fell 11% compared to a year earlier. Tesla has continued to cut prices across Europe while introducing a much-cheaper, shorter-range Model Y in the U.S.
The production of a newly revamped Model S and X will be starting this month, while Model S Plaid deliveries will be starting in February, Tesla said. Tesla also expects to launch its long-awaited Tesla Semi later in 2021. This update suggests that the Tesla Cybertruck pickup will not be launched in 2021. Yet, Elon Musk on the conference call said that Tesla would be fortunate if it could make a few Cybertrucks by the end of 2021.
Tesla continued big capacity growth, as its Berlin and Austin factories are set to begin production sometime in 2021. The carmaker expects to grow deliveries 50% annually over time but sets higher goals for 2021 as it is expecting to deliver more in 2021. This implies more than 749,325 vehicles this year vs. 499,500 in 2020.
Tesla, however, signaled that Q1 will be weak. The company pointed out that the Model S changeover and chip shortage were hurting the auto industry badly.
Tesla stock fell 5% overnight, while shares sank 2.1% to 864.16 on Wednesday. It can be said that Tesla’s stock has been in a high-tight-flag pattern.
Tesla Inc. Stock
Source: Investor’s Business DailyOpens a new window
Facebook Earnings
In 2020, there was a considerable spike in the Facebook platform usage as most remained homebound due to the pandemic. This saw a surge in ad business on the Facebook platform in addition to record-breaking online holiday shopping. As a result, Facebook posted record revenue and profitOpens a new window . The company reported1.84 billion daily active users in Q4 and 2.8 billion monthly active users. However, its shares fellOpens a new window  as it warned of the negative impact to its ad business this year due to new norms and curbs on pulling users’ data for ad targeting.
Facebook earnings jumped 52% to $3.88 a share, with revenue up 33% to $28.07 billion. Analysts expected Facebook earnings per share of $3.19 on revenue of $26.4 billion.
The Facebook stock retreated 2% as it dropped 3.5% to 272.14 on Wednesday. According to the market closure numbers of Wednesday, the official buy point for FB stood at 304.77.
Facebook Inc. Stock
Source: Investor’s Business DailyOpens a new window
Facebook Targets Apple Over Privacy Messaging
Mark Zuckerberg, Facebook’s chief executive, used the company’s earnings release on Wednesday to take a dig at Apple as he termed it as one of its biggest competitors. Mr. Zuckerberg laid allegations on Apple that the iPhone maker had made misleading claims about user privacy and that new rules around advertiser tracking may hurt small businesses in the long term.
“Apple may say they’re doing this to help people,†Mr. Zuckerberg saidOpens a new window . “But the moves clearly track their competitive interests.â€
Apple was reluctant to immediately respond to Mr. Zukerberg’s comments. However, it will be interesting to see how this battle shapes the top two companies in days to come.
In conclusion
The stock market rally suffered significant losses on Wednesday. However, Apple, Facebook, and Tesla headlined a huge earnings night. Looking closely at the reported earnings of the big three, it is fair to say that Apple and Facebook topped the high expectations for the holiday quarter, while Tesla’s results seemed mixed.Â
Now that the earnings are public, Thursday’s action will reveal if there could be a pause or moderate drop in a stock or the start of something even more serious. Therefore, the market reaction to the Apple, Tesla, and Facebook earnings reports will be key for the remaining days of the earnings week.
Do you think the stock market rally will continue to dwindle in the coming days of the earnings week? Comment below or let us know on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to hear from you!