Tesla, Snap, Apple – which stocks should you be buying and selling now

Dan Ives, head of technology research at GBH Insights, talks to IGTV’s Victoria Scholar about the tech earnings this week in the United States. 

Tesla

Tesla slumped 4.55% in the after hours session following the release of its quarterly earnings. At first glance, the numbers appear better than expected.

The electric carmaker reported a first quarter (Q1) record loss of $709.6 million. Excluding items, that amounts to a loss of $3.35 per share (compared with analysts’ estimates for around $3.58). Revenue hit $3.41 billion, compared with expectations for $3.22 billion. Capital spending hit $1.1 billion in the first three months of the year, which was larger than expected. Free cash flow hit minus $1 billion, down from negative $277 million in Q4. CEO Elon Musk said Tesla will reach its production target of 5000 Model 3 cars a day by the end of June, also saying that the firm should become profitable in the latter six months of 2018.

Apple

Shares in Apple closed the session up 4.42% following its quarterly update. The tech giant returned cash to shareholders through a $100 billion share buyback programme and raised its dividend by 16% to $0.73 a share.

iPhone sales came in at 52.2 million for the first three months of the year, having risen 3% year-on-year, but came in just shy of Wall Street’s estimates. According to CEO Tim Cook, the iPhone X was the best-selling device each week in the quarter, allaying concerns over the smartphone’s high price tag. Group revenue rose 16% to just above $61 billion. Services revenue soared to $9.1 billion. Average selling prices fell short of estimates, coming in at $728, compared with expectations for $742. Apple’s group Q2 profits rose 25.3% to $13.8 billion. The results also boosted shares in Apple’s suppliers in Europe, including STMicroelectronics and Austria Microsystems.

Snap

Snap shares hit an all-time low, falling by 21.9% on Tuesday after a disappointing quarterly update. Snapchat’s ad prices, excluding Story ads, slumped by 65% year-on-year.

Disappointing guidance also spooked investors after Snap warned that revenue would ‘decelerate substantially’.  There were concerns over the quarter about the company app’s redesign, after Kylie Jenner shed $1.3 billion off its market cap by tweeting that she was ‘sooo over’ Snapchat. Revenue hit $230.7 million falling short of estimates by $13 million. Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) came in at minus $218 million, down from $158 million in Q4, and was the worst figure since the stock’s floatation. Dan Ives, head of technology research at GBH Insights, said Snap is ‘in the penalty box over the next few quarters with this “black box” 1Q performance’.

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