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Last week was a big week for corporate earnings reports. With stocks dropping after disappointing and popping after wowing, it was certainly exciting to watch the news come in.
Big earnings reports can really move a stock. Whether that move is up or down depends on what makes the earnings report so big.
A week and a half ago Amazon (Nasdaq: AMZN) announced massive revenues that were right in line with Wall Street expectations, $19.34 billion. But because the company is investing so heavily in its future growth its net loss was $126 million for the quarter.
Investors are clearly tiring of Amazon’s focus on growth and want the company to start cashing in on its investments. They sent the stock down almost 10% the next day.
Some earnings reports are more important than others. In fact there were five earnings reports in particular that I think were the most important from last week.
Big Earnings Report 1: US Steel (NYSE: X)
When the average person thinks of stocks they probably think of companies like Amazon and Google. I doubt they think of US Steel.
The backbone of the American steel industry for more than 100 years, US Steel was hit hard by the financial crisis. Thus, its success is seen as a very positive sign for the US economy.
The company was expected to report a loss of $0.33 per share but actually managed to earn $0.17 per share. This was good for an earnings beat of 151%.
The stock rose almost 20% last Wednesday and bucked the market Thursday to close higher while just about everything else was in the red.
Big Earnings Report 2: Twitter (NYSE: TWTR)
Twitter is the new kid on the block when it comes to social media. It is up against giants like Google (Nasdaq: GOOGL), Facebook (Nasdaq: FB) and LinkedIn: (Nasdaq: LNKD) for eyeballs and advertising dollars.
The company beat on earnings, losing only $0.23 per share instead of the $0.28 loss analysts were expecting.
The real story for Twitter’s big earnings report was the strength and profitability of its advertising business.
Total timeline views jumped 15% and the amount that Twitter was able to charge advertisers for those timeline views jumped 100%. As long as those metrics remain strong, Twitter is on the right path.
That’s why investors sent shares higher by 20% on Wednesday.
Big Earnings Report 3: GoPro (Nasdaq: GPRO)
The honeymoon is officially over for GoPro.
The company’s June IPO was a smashing success for the company. The IPO price of $24 was met with a 30% pop when shares finally traded. Another pop of 15% the following day left IPO investors sitting on a roughly 50% gain in two days.
Shares were up 75% from the stock’s IPO prior to Thursday’s earnings report.
While the company actually beat revenue estimates, it clearly wasn’t enough to satisfy the hype that had driven shares higher.
The stock was down over 14% on Friday.
Big Earnings Report 4: LinkedIn
The verdict is in.
Investors love the growth story coming out of companies offering targeted online advertising. Facebook jumped 5% on earnings. Google is up 27% over the past year. Twitter jumped 20% on its own earnings.
LinkedIn is certainly no exception to the rule.
The company beat analyst expectations of $0.39 per share with earnings of $0.51 per share. It beat revenue estimates and raised its guidance for the next quarter. LinkedIn is quickly growing into the backbone of the human resources industry and an essential tool for job seekers.
Just look at the chart below. It helps explain why the stock jumped over 11% on Friday.
SOURCE: Business Insider
Big Earnings Report 5: Tesla (Nasdaq: TSLA)
I recently sold my Tesla stock because, while I fully believe Tesla is growing up to be a titan of the auto industry, I find its valuation to be a little unnerving.
The company must continue to impress investors each quarter to keep the stock moving higher. Sure enough, it did just that with Thursday’s earnings report.
The stock jumped higher Friday, closing up almost 4.5%. While this isn’t as big a jump as some of these other names, I consider this a big move for a company that was already up 50% in 2014.
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