The earnings season is about to peak, with two major players, Microsoft and Amazon, set to release their first-quarter results today after the closing bell. Approximately 180 companies from the S&P 500 are presenting their financials this week, with the spotlight, as usual, on Big Tech.
The S&P 500 index barely edged into positive territory on Wednesday, gaining just one point as investors proceeded cautiously. The broader Wall Street index was lifted mainly by the significant influence of one company. Any guesses? Here's a clue: don't focus on the numbers; pay attention to the narrative.
Tesla's stock surged 12% on Wednesday despite the company reporting disappointing earnings figures. Does that make sense?
Tesla generated revenue of $21.3 billion, falling short of the estimated $22.7 billion and marking a 9% decline from the same quarter last year. Net income dropped by 55% compared to the previous year, totaling $1.1 billion. Earnings per share stood at 45 cents, missing the expected 51 cents.
Fortunately for shareholders, Elon Musk offered a timely statement promising to revitalize Tesla's momentum after a challenging start to 2024.
During the earnings call, Tesla's CEO announced that the more affordable model would be released sooner than anticipated. Musk informed shareholders that the company has revised its production timeline to start earlier, aiming for early 2025 or possibly late this year.
Another tech behemoth, Meta, also released its earnings report. While the earnings were satisfactory, showing a 27% revenue increase to $36.5 billion, surpassing consensus estimates of $36.2 billion, Meta's stock experienced a sharp decline. How come?
This was due to the company's CEO, Mark Zuckerberg, dampening investor sentiment during the investor call. Zuckerberg expressed his ambition to transform Meta into the leading AI company in the world and raised the full-year expense guidance to $99 billion from $94 billion. As a result, shares plummeted 15% before Thursday's opening, wiping out $200 billion in market capitalization.
So, which should the market put more faith in – actual data or persuasive rhetoric?
