Plus, Boris Johnson just called for a U.K. general election in December, and investors are about to get their chance to invest in space tourism.
The Dow dropped 100 points, or 0.4%, this morning. Meanwhile, the S&P 500 added 0.1% and the Nasdaq gained 0.8%.
It’s a busy day for earnings, with several big name companies reporting. Microsoft is up 2% after its Q1 results topped estimates and boosted analyst confidence in its late yesterday. The software giant reported earnings per share of $1.38 on revenue of $33.06 billion, compared to expectations of $1.25 per share on revenue of $32.23 billion. Jeffries analysts wrote that Microsoft should be able “to weather any storm,” while Wedbush Securities analyst Dan Ives said, “MSFT delivered strength across the board with no blemishes and importantly gave stronger than expected December quarter guidance which speaks to an inflection point in deal flow as more enterprises pick Redmond for the cloud.” Comcast reported an earnings beat this morning with earnings per share of $0.79 on revenue of $26.83 billion, compared to estimates of earnings per share of $0.75 on revenue of $26.77 billion. Comcast shares are currently up 0.2%.
But it hasn’t been all positive results. Twitter shares are down -19% after the company reported that its Q3 was plagued by product issues and advertising “headwinds.” The social media company reported earnings per share of $0.17 on revenue of $823.7 million, compared to analyst expectations for earnings per share at $0.20 on revenue of $874.0 million. Twitter also warned that the headwinds it came up against will “continue to weigh on the overall performance of our advertising business in the near term,” and issued lowered guidance in Q4 and warned the issues could “bleed over” into 2020 as well. Goldman Sachs also downgraded Twitter from Buy to Neutral after earnings, and reduced its price target for the stock from %52 to $34. And 3M shares are down more than -4% after the industrial conglomerate fell short of analyst estimates for quarterly revenue and cut its full-year profit forecast this morning. 3M said it expects full-year sales to decline between 1% and 1.5%, compared to sales growth of 1% at the mid-point forecast earlier this year. Gordon Haskett analyst John Inch wrote about 3M, “We believe investors anticipated a weak quarter and guide down. Operationally, this appears worse.”
In all, forty-five S&P 500 companies are expected to report earnings today, with Amazon, Intel, and Visa among those scheduled to report after the bell. Amazon is expected to show more signs of growth when it reports this afternoon. Analysts are expecting Amazon to report revenue of $68.8 billion, a 21.6% year-over-year jump. The company has said that it has spent more than $800 million on introducing free one-day delivery, and Macquarie Research wrote in a note, “While the one-day shipping investment makes sense for the long-term, in the near-term, it will drive lower margins than some expect.”
As the Brexit impasse continues, Boris Johnson said today that he will seek a general election on December 12, which he will put to Parliament for a vote on Monday. To trigger an early election, Johnson will need a two-thirds majority, and while opposition parties say they want a general election, they first want to ensure that the country can’t crash out of the European Union without a deal on October 31, and thus an election may hinge on whether or not the EU grants an extension. “It is our duty to end this nightmare and provide the country with a solution as soon as we reasonably can,” Johnson wrote in a letter to Labour Party leader Jeremy Corbyn to appeal for support for the move. “These repeated delays have been bad for the economy, bad for businesses, and bad for millions of people trying to plan their futures.”
Investors are about to get their chance to invest in space tourism. Virgin Galactic will list directly on the New York Stock Exchange on Monday, and will be the first human spaceflight company to trade on public markets. Richard Branson’s Virgin Galactic spacecraft will be able to carry six passengers and two pilots to the edge of space, and will travel at three times the speed of sound as it rockets through Earth’s atmosphere. But tourists won’t spend much time off planet. Once the rocket-powered aircraft makes it to the edge of space, it will float weightlessly for a few minutes before heading back down to ground. And the short trip won’t come cheap either. Tickets currently cost $250,000 per person, and the company has a waiting list of more than 600 customers waiting for their chance to fly to space and back.
Stocks We’re Watching
Lithia Motors (NYSE: LAD): Lithia Motors shares rocketed to a new all-time high this morning, and are up more than 20% over the past week. The company delivered an earnings and revenue beat this morning, reporting earnings per share of $3.39, a 20% year-over-year increase, and the highest adjusted third-quarter earnings in company history. Net income jumped 16% to $79 million, and total revenues grew 8% to a record of $3.3 billion with same-store revenue growth in all business lines.