Traders Market Weekly: Fear and Greed in Las Vegas.

Viewing 15 posts - 16 through 30 (of 41 total)
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    It’s a tale of two tech stocks this morning. One one hand Alphabet (GOOG/L) posted some insane numbers, justifying its $2T valuation. On the other hand, PayPal (PYPL) looks like a vulnerable first mover under attack from every angle.

    Google (GOOG/L) +9% knocked the cover off the ball. Not a big surprise — the numbers are staggering (much like AAPL and MSFT) while a 20:1 stock split will get more retail investors intrigued at a cheaper price in July (even though it is a purely cosmetic dynamic). Search grew 36% to $43.3B; YouTube ads grew 25% to $8.6B, making it bigger than Netflix (NFLX) in terms of revenue. That core Google ad/services business grew profit 36% to $26B at a 37% margin. The cloud business continues to grow at a healthy clip. Google was trading at only 14x EV/EBITDA yesterday. Earnings estimates for 2022 still look too low.

    Match (MTCH) -1% reported adj. operating income just above estimates on lower-than-expected revenue and guided down Q1 and FY22, citing Omicron and the strong USD headwind. Tinder grew direct revenue 23% while all the other brands grew 26%. The company guided Q1 and FY22 (rev +15-20%, EBITDA margins flat) below consensus, again, citing Omicron and the strong USD headwind. Mgmt noted that new users often come from word of mouth, but in person socializing hasn’t normalized yet in many markets, especially in Asia. The valuation of ~30x EBITDA or 40x earnings is not a steal, but I do think this stock is a buy while out of favor as the clear leader in the online dating space. This is not a great environment for a stock that has disappointed, but I don’t think there is a ton of downside from here because there aren’t any existential concerns about this business longer term — the competitive position remains strong, especially as Hinge continues to take off.

    PayPal (PYPL) -19% missed earnings by a penny on in-line revenue and guided down Q1 and FY21 (+16-17% vs. +18%) with new user guidance forecasted well below estimates. The outlook is likely conservative, but I have no interest in buying this stock. Mgmt had a plethora of excuses, but the real issue for PayPal is competition. I have never been a fan of the stock, probably because I don’t use it outside of Venmo, which is free. This is a hyper competitive space — Apple Pay, Google Pay, Shop Pay, BNPL, Zelle, CashApp are all coming after PayPal. Anecdotally, I use Apple Pay when possible at stores (or even online) because it’s more secure than taking out your card. To make matters worse, the company spent $3.4B in buybacks at an average price of $221/share last year. I could be wrong, but I have no interest in buying the dip here. I would prefer to short pops (a bounce to ~158 could present a fade opportunity near term).

    Starbucks (SBUX) -3% missed earnings and lowered FY22 EPS guidance in the face of inflation. Sales missed estimates overseas and in China where the pandemic remains a headwind. Baristas across the country are considering forming unions. SBUX will be fine long term but this is not a stock I have any interest in buying.

    AMD (AMD) +11% reported a massive beat and raise as the company continues to take share. The stock continues to grow into its valuation, which has become more reasonable at ~33x EPS.


    Another EV SPAC has blown up after Electric Last Mile (ELMS) said its financials can’t be relied upon; the CEO and Chairman stepped down.


    Two ad-tech stocks that are reasonably valued: PUBM (on par with GOOG) and TBLA (much cheaper than GOOG).

    Facebook (FB) seems likely to post another solid report despite the Apple privacy headwinds (Google is largely immune). The blowout from GOOG does raise expectations for FB this afternoon, but FB’s business is direct response ads that serve mostly SMBs, much different from Google. A softer report from FB could reverse a lot of excitement we see in ad-tech stocks this morning.




    Wishing all of you deep in heart of TEXAS safekeeping during the COLD snap ahead :)


    Dow 35,629.33 224.09 0.63%
    S&P 500 4,589.38 42.84 0.94%
    Nasdaq 14,417.55 71.54 0.50%
    GlobalDow 4,237.24 26.20 0.62%
    Gold 1,807.30 5.80 0.32%
    Oil 88.29 0.09 0.10%


    Thanks CI – off to Costco to get supplies :) Steak and wine ….


    The global equity markets are under pressure, extending yesterday’s tumble at the close. Meta Platform’s (FB) unexpected earnings miss helped to send indices south. S&P Futures are down about 52 points to trade around the 4525 area. Sellers remained in control from the get go and have maintained the firm grip. The range saw the high early in the session at 4548.25 while the S&P is just off the low of 4523.00.

    In Asia, Japan mimicked the action seen in the US. Tech stocks paced the way for the Nikkei’s more than 1% decline. Semiconductors were a culprit with names such as Tokyo Electron, Screen Holdings and Advantest shedding 2-4%. Fast Retailing slid 4% after reporting weaker than expected sales for January. China and Hong Kong remained closed for the Lunar New Year holiday.

    In Europe, the major bourses are down in sympathy, although the extent may have been limited with the ECB and BOE set to provide their respective updates later this morning. Corporate earnings ramped up with the likes of Roche (-3%), Infineon Technologies (-4%), ING (-4%) and Nokia (-4%) trading lower following their fiscal year results.

    Market Updates

    S&P Futures vs Fair Value: -56.0
    10 yr Note: 1.775%
    USD/JPY: 114.77 +0.30
    EUR/USD: 1.1283 -0.0024
    Europe: FTSE: -0.2% DAX: -0.6% CAC: -0.4%
    Asia: Hang Seng: CLOSED Shanghai: CLOSED Nikkei: -1.1%
    Gold (1803.70 -6.60) Silver (22.43 -0.28) Crude (87.31 -0.95)


    S&P 500 futures 0.9% below fair value; Nasdaq 100 futures 2.2% below fair value; DJIA futures 0.1% above fair value
    Catalysts for the disposition of the futures market:
    Disappointing earnings results and guidance from Meta Platforms (FB), which is down 22%
    Shock value of FB’s decline, which is weighing heavily on sentiment and belief in sustainability of recent rebound effort
    Weakness in growth stocks
    Festering concerns about central bank tightening efforts as Bank of England raises rates 25 bps to 0.50% in first back-to-back hike since 2004
    Earnings guidance in general not as robust as past quarters, feeding worries about peak margins and waning growth
    Qualcomm (QCOM) posts better than expected earnings and guidance, yet stock slips with broader market sentiment
    Honeywell (HON) disappoints with FY22 guidance; HON -3.5%
    Merck (MRK) beats, but FY22 EPS guidance below consensus; MRK -0.7%
    ECB leaves its key rates unchanged, as expected, but says will discontinue net asset purchases under PEPP at end of March
    Senate holding hearings today on President Biden’s Fed Governor nominees


    Research calls of note:
    Upgrades: SEDG, CHRW, PHM, WRB
    Downgrades: DT, GPS, FB, EXC, FSLR, PYPL, VRTX


    apan’s January Services PMI 47.6 (last 52.1)
    South Korea’s January Nikkei Manufacturing PMI 52.8 (last 51.9)
    India’s January Nikkei Services PMI 51.5 (expected 53.0; last 55.5)
    Australia’s December AIG Construction Index 45.9 (last 57.0), December Building Approvals 8.2% m/m (expected -1.0%; last 2.6%), and December trade surplus AUD8.356 bln (expected surplus of AUD10.600 bln; last surplus of AUD9.42 bln). December Imports 5% m/m (last 6%) and Exports 1% m/m (last 2%). January Services PMI 46.6 (last 55.1)


    Japan’s Nikkei: -0.6%
    Hong Kong’s Hang Seng: CLOSED
    China’s Shanghai Composite: CLOSED
    India’s Sensex: -1.3%
    South Korea’s Kospi: +1.7%
    Australia’s ASX All Ordinaries: -0.3%


    Eurozone’s December PPI 2.9% m/m (expected 2.8%; last 1.8%); 26.2% yr/yr (expected 26.1%; last 23.7%). January Services PMI 51.1 (expected 51.2; last 53.1)
    Germany’s January Services PMI 52.2, as expected (last 48.7)
    U.K.’s January Services PMI 54.1 (expected 53.3; last 53.6)
    France’s January Services PMI 53.1, as expected (last 57.0)
    Italy’s January Services PMI 48.5 (expected 50.0; last 53.0)
    Spain’s January Services PMI 46.6 (expected 51.5; last 55.8)


    STOXX Europe 600: -0.5%
    Germany’s DAX: -1.1%
    U.K.’s FTSE 100: -0.2%
    France’s CAC 40: -0.6%
    Italy’s FTSE MIB: -0.8%
    Spain’s IBEX 35: -0.2%


    Meta Platforms (FB 251.25, -71.75): -22.2% after missing EPS estimates and guiding Q1 revenue below consensus due to ad impression and pricing related factors.
    T-Mobile US (TMUS 117.95, +8.37): +7.6% after beating EPS estimates on below-consensus revenue.
    Honeywell (HON 201.00, -6.55): -3.2% after guiding FY22 EPS and revenue below consensus, overshadowing its EPS beat.
    Merck (MRK 81.75, -0.26): -0.3% after guiding FY22 EPS below consensus while beating EPS estimates.
    Qualcomm (QCOM 185.10, -3.10): -1.7% despite beating top and bottom-line estimates and guiding fiscal Q2 EPS and revenue above consensus.
    Spotify (SPOT 171.60, -20.32): -10.6% despite beating top and bottom-line estimates. On a related note, a few more artists want to remove their music from the platform, according to The Wall Street Journal.

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