While several high-profile companies like Twitter Inc. (TWTR), Snap Inc. (SNAP), and Procter & Gamble Co. (PG) reported earlier this week, earnings season kicked into high gear Tuesday after some of the market’s heaviest components released their quarterly financials. Arguably the most watched reports were those from Microsoft Corp. (MSFT), Facebook Inc. (FB), Boeing Co. (BA), and Tesla Inc. (TSLA), only half of which saw big post-market gains.
Here’s a recap of all four firms’ earnings reports – and how investors reacted to each…
Microsoft
Thanks largely to massive strength in its cloud-computing sector, the iconic software company reported better-than-expected growth on both the top and bottom lines in its fiscal third quarter. Microsoft reported earnings per share (EPS) of $1.14 during the January-March period, beating Wall Street’s expected $1 per share by 14% and increasing 20% from $0.95 per share a year earlier. The company posted $30.6 billion in revenue, which edged past the $29.84 billion estimate by 2.5% and grew more than 14% year-over-year from $26.82 billion.
Microsoft’s cloud business grew an enormous 41% since the fiscal Q3 2018 report, with the company citing strengthening sales of its Azure cloud app products as the main reason for the business’s expansion. Cloud services now make up nearly one-third of Microsoft’s total revenue, making Azure a formidable competitor to Amazon.com Inc.’s (AMZN) global cloud-computing dominance.
Investors rejoiced at the news of Microsoft’s growth. Shares of MSFT climbed from $125.01 to $129.66 after hours, making for a post-market gain of 3.7% and pushing the company’s market cap above $1 trillion. At that price level, MSFT hovers at an all-time high and boasts a year-to-date rally of 27.7% from the Dec. 31 close of $101.57.
The social media giant has been on a tear in 2019, and Tuesday’s Q1 earnings release didn’t disappoint any bullish FB investors. Facebook earned $0.85 per share on revenue of $15.08 billion, the latter surpassing the $14.98 billion forecast by a small 0.7% and climbing a healthy 26% from $11.97 billion in the year-ago quarter. However, user growth flat-lined during the quarter, as daily active users (DAUs) met analyst expectations at 1.56 billion. The number of monthly active users (MAUs) came in at 2.38 billion, slightly edging by Wall Street’s estimated 2.37 billion.
News outlets mostly focused on Facebook’s expectation that the Federal Trade Commission (FTC) could fine the company anywhere between $3 billion and $5 billion due to violating privacy laws, including a 2011 decree and multiple statutes stemming from last year’s Cambridge Analytica scandal. If the fine happens, it would be one of the U.S. government’s biggest penalties ever levied against a tech firm. In its statement, Facebook said the government inquiry remains nebulous and that “there can be no assurance as to the timing or the terms of any final outcome.”
Nevertheless, investors reacted enthusiastically to the company’s swath of financials. FB shares ripped more than 7% after the market closed Tuesday, surging from $182.58 to $195.90 at one point. At $195.90 per share, FB stock is up 49.4% from the $131.09 settlement on Dec. 31.
Boeing
Most market participants expected the defense giant to report weak financials in the wake of the Boeing 737 Max crisis stemming from two fatal crashes in October 2018 and March of this year. Those expectations were met, as the firm reported its worst quarterly results in years. Earnings declined 13% year-over-year from $3.64 to $3.16 per share. Revenue also dropped 2% in the same time from $23.4 billion to $22.9 billion.
Halted sales of the company’s signature 737 Max hit the company hard in the first quarter, with deliveries of its 737 aircraft coming in 50 units short of expectations. There were only 32 new orders for the aircraft in Q1, a massive drop from 122 in the same period last year. While shipping 50 less units may not seem like much, it contributed to a more than $1 billion revenue decline for Boeing’s commercial airplanes business.
Despite the terrible earnings, investors were largely unfazed during post-market trading. Shares of BA didn’t move much after the closing bell, steadying near the closing price of $375.50. But the stock has already been languishing for months, as shares are down 14.8% from the March 1 high of $440.62. Short positions have also been rising, now up to 5.07 million shares or 0.9% of all outstanding shares.
Tesla
The electric car company and controversial entrepreneur Elon Musk’s biggest venture saw its profit streak end in spectacular fashion with the latest quarterly report. Tesla lost $702 million during the January-March period, more than double the $301 million loss many Wall Street analysts – one of who, Equity Research’s Daniel Ives, said Q1 would be “an apocalyptic quarter” – predicted. It’s even worse when compared to the back-to-back profits reported in the previous two quarters. For example, Q4 2018 saw a profit of $139 million on sales of $7.2 billion.
Slowing sales were to blame for the sharp losses. Earlier this month, Tesla said only 63,000 vehicles were delivered in the first three months of the year, down 31% year-over-year for easily the single biggest decline in the company’s history. It also doesn’t help that Musk continues to fight with the Securities and Exchange Commission (SEC) over tweets regarding taking the company private, which the SEC calls attempts to mislead investors.
As a result, TSLA stock dove 2% on the day from $263.90 at Tuesday’s close to $258.66 on Wednesday. Shares have declined 22.3% this year since the Dec. 31 close and currently sit at their lowest level in nearly two years.