Is This the End for the FAANGs?
Earnings season has delivered more than its fair share of market-moving moments so far this week.
Investors stayed glued to their screens yesterday afternoon as Amazon.com (NASDAQ: AMZN) reported a whopping $2 billion in profit during the second quarter, the company’s biggest haul ever.
Shares spiked on the news after-hours.
Meanwhile, one of Amazon’s FAANG brethren is feeling the heat.
Facebook Inc. (NASDAQ: FB) shares are reeling after a small earnings miss, followed by what many are calling a “disastrous” conference call.
Are two of the tech’s most recognizable names about to go their separate ways and end the FAANG acronym as we know it?
Let’s go to the charts to find out…
Facebook’s Earnings Flop
Facebook shares finished lower by a staggering 18% Thursday.
The market’s top social media stock took its first hit when it released numbers that were slightly below analyst expectations.
But the stock accelerated its decline during the ensuing conference call, when Facebook CFO Dave Wehner “dropped one bombshell after another, rattling investors and raising red flags about whether Facebook’s powerful moneymaking machine is starting to sputter,” The Wall Street Journal reports.
Facebook management offered plenty of excuses. But none of them stuck.
For analysts and investors, it was clear that Facebook’s soft guidance for the remainder of the year was going to be an issue. As far as the market is concerned, Facebook now has a growth problem.
That’s a major red flag — especially during a roaring bull market as most companies deal with the weight of high earnings expectations.
As the dust clears, Facebook shares are right back where they were in mid-May as the company was recovering from its data breach scandal. That’s bad news for anyone who bought shares this week looking for an earnings pop, of course.
We’ll have to see if the stock can put in a new base at these levels. So far, the Facebook fiasco hasn’t dragged down the entire tech sector.
That’s good news for the bulls who are just looking to get through the week without another high-profile earnings flop.
Amazon’s On Its Way to $1 Trillion
The only thing that can stop Amazon right now is Amazon itself.
Unlike King Zuck, Jeff Bezos seems adept at navigating bad press and problems when needed.
Not that Amazon gets much bad press as it is, and despite Trump’s Twitter rants against the company and Bezos, the company powers on.
Amazon shares jumped 4% ahead of Friday’s open. Here’s the chart:
FactSet reports, earnings per share beat estimates coming at $5.07 versus $2.50 expected. Revenue fell short of consensus estimates, coming in at $52.9 billion as opposed to $53.41 billion, but this miss is offset by another top-line number.
CNBC reports AMZN’s net income saw a “12-fold increase,” surging to a “record $2.5 billion.”
The great earnings beat, plus three quarters in a row of $1 billion-plus profits, has Wall Street salivating.
RBC Capital analyst Mark Mahaney tells CNBC, “Amazon is probably right now the most beloved of the FAANG stocks.”
After successfully entering the grocery game, and now with future plans to enter health care and auto sales, there’s strong belief that Amazon will become the world’s first trillion-dollar company.
Yes, at $1,836 per share the stock isn’t cheap, but there’s plenty of room to grow.
Can you say partial shares?
For Technology Profits Daily,
Chief Investment Expert