Investors were reminded of something this week as tech earnings poured in: It's a stock picker's market right now.
What does that even mean? It means that companies logging strong results are getting rewarded by investors. Those that are not posting good results are getting hammered. So do your homework, and pick correctly.
Examples of this were abundant during the week.
PepsiCo's (PEP) earnings were more impressive than Coke’s (KO), and its stock was rewarded accordingly. Amazon (AMZN) called out weakness in its cloud services in April, and investors dumped the stock.
I suspect this stock picker's market narrative will continue next week too. Cheers to an AI-filled Apple (AAPL) earnings call on May 4!
Amazon said AWS net sales grew by about 11% in April. That marks a deceleration from 16% in the first quarter.
Snap called out a 6% year-over-year revenue decline for the second quarter. Meta guided to about 7% sales growth in the second quarter.
Meta ended the first quarter with 77,100 employees, down 11% quarter over quarter.
Bed Bath & Beyond stock is slated to get delisted on May 3 in the wake of its bankruptcy filing.
Tesla stock is down by 16% in the past month on post-earnings profit margin concerns.
Earnings call vibes
"The uncertain economic environment and ongoing inflationary pressures continue to be a factor, and we believe it's continuing to drive cautious spending across consumers," Amazon CFO Brian Olsavsky said. "This means our customers are looking to stretch their budgets further and are focused on value. We saw some moderated spending on discretionary categories as well as shift to lower-priced items and healthy demand in everyday essentials, such as consumables and beauty."
"So far, we've gone through two of the three waves of restructuring and layoffs that we have planned for this year in our recruiting and our technical groups," Meta CEO Mark Zuckerberg said. "In May, we're going to carry out our third wave across our business groups. And this has been a difficult process, but after this is done, I think we're going to have a much more stable environment for our employees."
"We do see some of the pressures that give us reason to believe that our view on the macro outlook is accurate," McDonald's CEO Chris Kempczinski said. "One, we are seeing a slight decrease in units per transaction. So things like did someone add fries to their order? How many items are they buying per order? We're seeing that go down in most of our markets around the world slightly, but it's still going down."
"And then the other thing is we continue to monitor very closely the acceptance of our pricing," Kempczinski added. "I'm really proud of how our system has executed pricing in light of the double-digit inflation that we have been experiencing. But we are seeing in some places resistance to pricing, more resistance than we saw at the outset. So I think all of those things are reflective of again, a more challenging macro environment."
Chart of the Week
In search of a good quarter and a sales bottom for Snap, here's a chart from Jefferies tech analyst Brent Thill.