Tesla
Investors are hearing more of the same message from Tesla (TSLA) in this afternoon’s earnings report.
Shares of the electric vehicle company are trading lower by 7% after the company’s earnings release. The lower prices are due to the company repeating the message that in 2024, its vehicle growth rate may be notably lower than growth rate achieved in 2023
Earning per share results were better than Wall Street expectations, despite seeing an increase in revenue for the quarter. Earnings per share for the automaker were $0.52 compared to expectations of $0.62, a handy miss.
Automotive sales dropped 7% from this time last year as Tesla continues to struggle with competitive pressure in the industry and spend weary consumers.
The company will hold their conference call later in the afternoon when investors will expect to hear updates on the highly anticipated Robotaxi business rollout.
Tesla shares have rallied more than 80% since last quarter’s earnings results putting pressure on Tesla’s management to deliver a positive quarter and update on the Robotaxi product which the company says will continue to pursue a revolutionary “unboxed” manufacturing strategy.
Management adds that timing of Robotaxi deployment depends on technological advancement and regulatory approval, working vigorously on this opportunity given the outsized potential value.
Investors need to maintain a watch on the stock’s 20-day moving average at $235 as a break below this price will trigger additional selling to a “buy the dip” target of $200.
Alphabet
Alphabet (GOOGL) shares are trading slightly higher after Tuesday’s close as the company reported their latest earnings results.
For the last quarter, Alphabet reported earnings of $1.89 per shares versus the $1.84 that Wall Street analysts were expecting to see. Revenue for the quarter was also better than expected at $84.72 billion against forecasts of $84.22.
Alphabet reported improved margins from 29% to 32% as their strength in Search and momentum in Cloud computing continues to grow.
Alphabet’s management commented that “We delivered revenues of $85 billion, up 14% year-on-year driven by Search as well as Cloud, which for the first time exceeded $10 billion in quarterly revenues and $1 billion in operating profit. As we invest to support our highest growth opportunities, we remain committed to creating investment capacity with our ongoing work to durably re-engineer our cost base.
Looking at the company’s segment growth, Google Cloud revenue rose 28.8% year-over-year to $10.35 billion. Google Advertising revenue rose 11.1% for the same period to $64.62 billion with both search and YouTube revenue growing by around 13%. YouTube revenue results missed analysts’ expectations for the quarter.
Investors will be looking for more comments on the company’s search business as Alphabet has replaced many search results with the company’s “AI Overview”. Investors have feared that this move would cut back on search ad revenue by pushing paid advertisements lower on results pages.
Like many of the large cap technology companies, Alphabet shares were trading just above critical support at their 50-day moving average ahead of the earnings report.
We’re likely to see additional selling pressure on these stocks as investors grow concerned about the upcoming August swoon that is likely to move prices lower.
Any weakness in Alphabet shares should be seen as an opportunity to add shares to a portfolio after today’s strong earnings report.
United Parcel Services
United Parcel Services (UPS) shares are 13% lower today after the company failed to deliver on their quarterly earning results.
The earnings miss is a rare one for the delivery and logistics company, with the last earnings miss happening in April, 2020.
United Parcel Services’ customers have been shifting to lower price and lower margin services. That shift caused a miss on both revenue and earnings per share for the last quarter.
This isn’t the first sign that businesses are starting to cut back on expenses. Last quarter management from Salesforce and IBM indicated that some companies were taking longer to commit to new business agreements, stalling revenue.
Like those examples, United Parcel Services’ management guided their revenue higher looking forward, suggesting that the economy may just be in a short soft patch.
Today’s drop in UPS shares represents the worst move that the stock has seen in more than five years.
The break lower puts the stock back at $125 – a price that should be viewed as critical support – a price last seen in July of 2020 as the economy was emerging from the first shock of the Covid-19 pandemic.
UPS stock has been trading in a long-term bear market trend since April of 2023, when the stock broke below its long-term 20-month moving average.
UPS stock is the third largest company in the Transportation Index ETF (IYT). Recent trends in the Transportation index have been hinting that a larger bear market trend may emerge in the market.
For that reason, investors would be wise to maintain a vigil on UPS and other transportation companies as we head into the second half of the year.
