Are the industrials back? Is tech going to sink? Why did PayPal drop after good earnings and apple announces new event next week, let’s talk about the stock market
Hey everyone and Welcome I am going to react to the stock market news on movements from yesterday and what i expect next.
So, the stock market has done pretty well this year especially the tech heavy Nasdaq, being up more than 21%, while the broader S&P 500 is barely up and the Dow industrial is down for the year. YEARLY CHART
In the last week or so we have seen the VIX testing the 40 level but being rejected every time so it seems that there is enough confidence in the stock market for it not to collapse like back in march.VIX
Yesterday we saw the Dow Jones rising 1,6% or 423 points CHART , the S&P rose by 1,22% CHART and the Nasdaq was the laggard only up 0,42% CHART
While the strong economic reports that came in helped the stock market to rally, as the stock market was also helped by technical support and finally ended the selloff of October by bouncing of the SMA 200 BOUNCE CHART . As manufacturing PMI rose to 59,3, a number not seen in over 2 years PMI PMI2
The US manufacturing activity accelerate with new orders jumping to the highest level in nearly 17 years, the Chinese and Europeans also saw manufacturing sped up in the last month MANUFACTURING
Here is the heat map for the S&P from yesterday, you can see that the big names dragged the market down while most of the smaller companies were in the green to start November S&P HEATMAP
big companies in the tech sectors Apple, Amazon Facebook and Microsoft closed in the red yesterday while Alphabet continued to rise on the back of improved earnings and growth guidance. TECH EARNINGS
PayPal reported earnings yesterday after the bell as the company beat the estimates of earnings per share by more than 10% and saw a revenue increase of almost 25% year over year. EARNINGS This was the strongest ever quarter for growth in total payments for PayPal. While the earnings jumped more than 121% since last year. QUARTER OVERVIEW The Company also saw a increase more than 15million new active accounts in q3 up to a total of 361 million accounts, up more than 50% year over year while the free cash flow for the company also is up more than 40% year over year Q3 STATS
While the operating margin was also up significantly since last year both on a GAAP and Non-GAAP accounting so the company seems to have a great future ahead with growth widely available on an international basis. BALANCE SHEET
The company did drop in after market about 5% do to the lack in guidance for next year, but the lack in guidance for next year is very widely spread, as not many companies know what exactly will happen in the near future, but I don’t expect anything bad for PayPal to happen, as the company also announced recently that they will accept bitcoin storage and payments within the subsidiary Venmo. Bitcoin on PayPal
Apple announced yesterday that next Tuesday they will have an event in which they are expected to showcase the new Macs, the first ones to have internally designed processors, Apple News this Is a move away from Intel provided chips which I believe will further enhance performance and will eventually reduce costs for the company, resulting in a increase in gross margin for the products.
Also, Microsoft just confirmed that the new Xbox series will also make Apple TV available on the console, that means that Apple TV is available on all next gen consoles with Sony’s PlayStation 5 offering the service also Microsoft - Apple TV
This will likely be a boost for the service, apple really seems to be going all out to increase the services revenue which I believe is the right way to go, as the physical products are lasting longer and are not renewed ever year like in the past, this increase in services will make up for that lack of product sales. iphone Revenus Also recurring subscriptions revenue are more profitable for the company and are far more important in the eyes of the analysts. Services REvenue
Apple is one of the best, if not the best companies to own in your Portofolio as they are both a growth stock and a value stock since they do give out dividends. The company has given almost half a trillion dollars to shareholders and has many growth drivers like I said, the services, the new iPhone 12 that has the potential to be a super cycle and the company finally launching they’re own online sales in India. Apple Shareholders
With tech earnings coming in last week all delivered good beats on estimates. Google recovered from a Q2 slump in ad sales, as the biggest growth provider in the company was YouTube. TECH EARNINGS
While Facebook revenue increased 22% year over year the company seems to be in a difficult position going forward due to privacy issues both from the US government and from the changes that Apple will make which will impact a large base of users.
Twitter was the one that disappointed the analysts the most, as the increase in users was minimal but ad sales did grow. Still the stock plummeted more than 20% after earnings.
Pinterest saw a huge jump after the sales rose by 58%, as they become more popular and the customer base in more than 60% woman who decide the household buying they stand to see an increase in ad sales in the future also. PINTEREST
I believe that for Google and Facebook the most important thing at this moment is that they continue to grow the revenue from the huge amount of people that already use they’re services, while for the smaller companies it is far more important that they grow they’re user base, that ultimately will attract more ad revenues.
Peloton will report alongside Alibaba on Thursday after the market is very interesting to watch, that stock has dropped from it’s all time high about 20% but I can see that bouncing back if the numbers that are reported and guidance for next quarter comes in better than expected. (Full disclosure I am long Peloton) Peloton
Meanwhile Walmart, the biggest private company by number of employees in the world announced on Monday that they will stop using robots to keep track of inventory, despite the retailer not saying why the cut of the robots, I believe that for the moment it’s more efficient and cheaper that those jobs be done by the workforce. Walmart
So I strongly believe we should mostly trust the portofolios that we have build and not make any big changes as markets can seem chaotic. I believe that it’s almost impossible to time the market correctly and can hurt our returns if we are to sentiment driven.
Thank you for reading, please leave your opinion below, i will try to respond to everyone!
Have a great day and use your voting rights!
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