Stock Market is Unforgiving

This week will be the last busy week of the Q1 earnings season, with results from more than 130 S&P 500 companies set to be filed. By the end of this week, results from 88% of S&P 500 members will have been released. With the possible exception of Retail the trends for most of the sectors are already well established. For Q1 as a whole, combining the actual results that have come out already with estimates for the still-to-come reports, total earnings are on track to be down -7.4% from the same period last year on -1% lower revenues,

Let’s focus on the high technology sector and look at the stock market reaction to the most recent earnings reports by some of the largest tech companies in the world, we see mixed results. While both Amazon and Facebook saw their stock prices climb significantly on the day after they reported their results, Twitter and Netflix faced negative reaction in the wake of reporting disappointing Q1 numbers or offering weak Q2 guidance.

The chart below sums up Wall Street’s verdict on major tech companies’ first quarter results.

Source: Statista,Yahoo Finance

Twitter in particular took a dive. On the back of 310million monthly active users, the company posted revenues of $595 million. On top of this, the company did not have a positive outlook for Q2, and currently Twitter’s stock is trading more than 13% down in the immediate aftermath of the results coming out.

Source Twitter

Twitter expects Q2 revenues between $590 million and $610 million, but this is a huge step down from $678 million, which is what analysts had estimated before today’s release. Twitter’s 310 million active users is not great user growth, although it is up slightly. This graphic illustrates all too clearly the lack of growth.

First published by Adrian G Stewart at OOKII.Company

Adrian G Stewart

Adrian G Stewart

About adriangstewart

Senior executive with expert knowledge of all aspects of strategic marketing and a track record of creating sustainable competitive advantage. International management and leadership experience in both B2B and B2C organizations. Specialties:Strategic marketing management including; new product development, product life cycle management, business relationship management, market segmentation, marketing information systems, e-commerce and social media marketing.
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