Daily Management Review

Mixed Bag Of Q3 Results Form Top Tech Firms With Mixed Impact On Stocks Results


Mixed Bag Of Q3 Results Form Top Tech Firms With Mixed Impact On Stocks Results
A mixed bag of quarterly reports from top-tier technology companies resulted in stocks of Alphabet rallying while those of Apple and Twitter tumbled on Thursday.
These are the stocks that have caught the fancy of investors so far this year to power a stock market rally through the coronavirus pandemic.
Exchange-traded funds tracking the S&P 500 and Nasdaq went down about 1 per cent each following the share swings after the reports from the tech heavyweights after the bell.
With the novel coronavirus pandemic accelerating a shift towards online shopping, video streaming and other technologies, the indication that the largest US companies have expanded their businesses and outperformed smaller rivals this year as majorly upbeat quarterly results were reported by Facebook, Google-parent Alphabet and Amazon, as well as Microsoft which reported strong third quarter performance earlier this week.
While issuing some caution for the future, strong rises in advertising sales were reported by both Alphabet and Facebook. 2021 could be a difficult year because of pandemic related uncertainty, said Facebook, which is known to mostly be conservative with its forecasts.
While Alphabet’s stocks surged 7 per cent, there was a 1 per cent drop in Facebook’s stocks.
“These results are testament to the incredible strength of the Google franchise,” said Nicholas Hyett, an equity analyst at Hargreaves Lansdown. “Where other marketing driven businesses are struggling as advertisers become more cost conscious, it seems some of the cash is in fact finding its way to the internet search giant.”
But after its iPhone sales missed estimates, there was a 5 per cent fall in the stocks of Apple even on the back of the company’s quarterly revenue and profit beating market expectations. That resulted in the wiping out of $100 billion from the stock market value of the iPhone maker.
According to IBES data from Refinitiv, analysts expected a 13 per cent drop during the third quarter in the aggregate S&P 500 earnings, compared to a rise of 4.5 per cent rise in the earnings from the tech sector, which includes Apple, Microsoft and many other of the largest companies in the index.
Twitter shares went 17 per cent lower after thee number of new users reported by the social media company was lower than what Wall Street as expecting.
And despite the e-commerce giant Amazon reporting record quarterly profit and forecasting an increase in holiday sales, there was a 2 per cent drop in the shares of the company after the company said it expected an increase in costs related to the pandemic.
According to a research note from Bespoke Investment Group on Thursday, there would be a drop of about 4 per cent in 2020 in the S&P 500 without the so-called FAANG stocks - Facebook, Apple, Amazon, Netflix and Alphabet, while the index has risen by 2 per cent sop fat this year.
“Due to both the huge weight of these stocks and their outperformance, the market has become more reliant on them than ever before for its gains,” according to Bespoke.