Apple, Facebook, and Tesla Release Earnings as Market Dips

28 Jan 2021 · 3rd Party Analysis

WRITTEN BY ThorFX

In Summary

  • Apple, Facebook, and Tesla all publish their earnings reports
  • Uncertainty characterizes the stock market

Three of the biggest companies in the S&P500 released their earnings reports late on Wednesday. Apple, Facebook, and Tesla posted mixed results in what turned out to be the worst day for Wall Street since October. Investors found safety in bonds while US indexes dived in wake of the Fed statement released by Chairman Jerome Powell.

As US stocks suffered their biggest one-day percentage drop in three months, Apple reported its highest-ever net profit on the back of strong sales in China. Fourth-quarter results for the tech company surpassed forecasts and arrived at $111.4bn, underpinned by strong demand in China, more than 57% in sales growth.

Net profits for Apple climbed 29% to $28.8bn, beating estimations of 6.3%. Earnings per share jumped 35% to $1.68. All five product categories hit double-digit growth in sales for the fourth quarter. Sales in iPad climbed 41%, while a 30% increase goes to the wearables unit. iPhone sales grew 17% to $65.6bn, or 59% of Apple’s revenues. Sales in the iPhone category grew at the slowest pace. Apple shares are pointing to a negative open by over 3% on Thursday.

The Tech Giants Fail to Impress Investors

Facebook posted record quarterly revenue aided by the latest efforts of the company to push into eCommerce amid the second wave of the pandemic as the holiday season unfolded. According to the report, fourth-quarter revenue at Facebook climbed 33% to $28.1bn, while net income rose 53% to $11.2bn, or $3.88 a share, beating expectations of $3.19 a share.

Advertising revenue remains the main driver of Facebook’s sales, while “other revenue”, such as the Oculus VR headset, jumped 156% to $885 million. Monthly active users, a key metric of Facebook’s growth and user engagement, grew by 12% to 2.8 billion users across Facebook’s platforms. Facebook shares initially slipped 5% in after-hours trading but then recovered slightly. The social-media giant is trading down by roughly 3% in pre-market hours on Thursday.

Tesla, the giant EV maker led by CEO Elon Musk, continues its struggle to make a profit from selling electric cars. The company is still reliant on regulatory credits to lift its profits, according to the figures released on Wednesday. Even though Tesla posted a sixth straight quarter of profits, it missed Wall Street expectations as investors were hoping for better sales results in 2020. Tesla shares fell as much as 7% in after-hours trading but the stock was able to recover and now points to a negative open by roughly 2% when the US session kicks off. Tesla revenue in the fourth quarter grew 46% to $10.74bn, while it earned $270 million, or 24 cents a share, lower than the consensus of $1.02 a share on sales of $10.47bn.

Apple, Facebook, and Tesla all slid in the after-hours when their earnings became known. Apple’s $100bn revenue was not sufficient to please investors. Additionally, the company did not offer a formal sales outlook for 2021. Facebook warned of “significant uncertainty” this year, while Tesla’s profits disappointed investors. The earnings reports by the three large-cap companies come amid a heightened market uncertainty during a wild week of speculation in the stock market.

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