The stock market rally hit record highs on the Dow Jones, S&P 500 and Nasdaq composite, shrugging off various warning signs. Bitcoin jumped to a record high as Tesla bought $1.5 billion of cryptocurrency, while more financial firms embraced it. Disney easily beat views with booming Disney+ growth. Marijuana stocks surged on good news for Tilray (TLRY) and Canopy Growth (CGC) as well as Reddit-fueled buying, but then sold off hard Thursday. General Motors (GM) crushed views but warned that industry chip shortages will hit profit.
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Stock Market Rally Hits Highs
The Dow Jones, S&P 500 and Nasdaq hit record highs as the stock market rally shrugged off warning signs. Marijuana stocks skyrocketed, but then sold off Thursday. General Motors (GM) and Toyota (TM) beat views while Tesla (TSLA) China sales fell.
Disney Beats Q1 Estimates Handily
Disney (DIS) reported fiscal Q1 EPS of 32 cents vs. views for a 42-cent loss, with revenue down 22% to $16.25 billion, beating estimates. Shares jumped to a record high. Disney is still reeling from theme park. Parks revenue sank 53% to $3.59 billion. The parks segment’s operating income was impacted by $2.6 billion. Disney sees costs related to regulations and safety measures totaling $1 billion in fiscal 2021. The one bright spot has been its streaming business. Disney+ notched 94.9 million subscribers, up from 86.8 million as of Dec. 2 and 258% from a year ago. Direct-to-consumer revenue, which includes Disney+ and other streaming services, jumped 73% to $3.5 billion. Operating losses narrowed to $466 million from $1.1 billion. Shares reversed lower from a record high Friday following earnings, but rose for the week.
Bitcoin Soars To Record High
Bitcoin surged to record highs near $49,000 on a series of headlines. Tesla (TSLA) announced early Monday that it bought $1.5 billion of the cryptocurrency after founder Elon Musk has voiced his support of the cryptocurrency in recent weeks. The luxury electric car company said it will also accept Bitcoin as a form of payment in the near future, according to an SEC filing. On Thursday, Mastercard (MA) said it will facilitate Bitcoin transactions, while Bank of New York Mellon (BK) said it would be a cryptocurrency asset custodian.
Pot Stocks Soar, Then Tumble
Marijuana stocks rocketed higher, then slashed lower, lit by a mixture of U.S. legalization hopes and signs that the Reddit board WallStreetBets had taken more interest. Canadian pot producer Canopy Growth said it could enter the U.S. legal market for THC “during calendar 2021,” if nationwide U.S. cannabis reform gains momentum. Fiscal Q3 sales beat estimates, and the company still lost money. But it said it expected to reach positive adjusted EBITDA — a measure of profitability — by the second half of its next fiscal year. Aurora Cannabis (ACB) reported a steeper-than-expected loss. Tilray (TLRY) reached a U.K. medical marijuana deal.
Marijuana Stocks Light Up On Legalization Hopes; Analysts Bring Cold Water
General Motors Beats, Falls On Chip Shortage
General Motors earnings vaulted 999%, comfortably beating views. Sales grew 22% to $37.5 billion, returning to growth after several down quarters on robust truck demand. Joining Ford (F) and several other automakers, General Motors (GM) warned that the global semiconductor shortage could reduce 2021 earnings in the billions. Both auto giants have idled factories due to the chip shortage, but GM expects to keep making its most profitable trucks while Ford’s cash cow, the F-150, has taken a production hit. GM shares fell after earnings.
Tesla China Sales Fall In January
Tesla (TSLA) sold 15,484 cars in China in January, according to the China Passenger Car Association, down from 23, 804 in December. The January figure includes Model 3s and Ys. There were 158,000 electric cars sold in China in total. Some Model 3 production is being exported. Meanwhile, several Chinese agencies told Tesla to improve quality and safety measures, following consumer complaints about battery fires, unexpected acceleration and failed over-the-air software updates. Tesla also announced that it expected to open its R&D center in Shanghai by year-end to begin work on a $25,000 electric vehicle.
Japanese Automakers Beat Views
Toyota (TM), Honda (HMC) and Nissan (NSANY) all beat earnings views. Toyota grew EPS 57% as sales rose 13%. Honda increased EPS 161% as revenue grew 6%. Nissan trimmed losses with revenue down 7%. Toyota also boosted its profit forecast 54% for the full year, shrugging off the global chip shortage while major rivals fall behind in production. It will launch two all-electric models and one plug-in hybrid-electric car in the U.S. this year. The Japanese carmaker overtook Germany’s Volkswagen (VWAGY) as the world’s largest carmaker in 2020. Toyota cleared a buy point.
Software Earnings
Cloudflare (NET) reported a Q4 loss of 2 cents per adjusted share, narrowing its loss from 6 cents a year earlier and just beating views. Revenue jumped 50% to $126 million, also beating. The provider of cloud-based networking and cybersecurity services guided in line for earnings but up for revenue.
Datadog (DDOG) earned an adjusted 6 cents per share, up from 1 cent a year earlier. Revenue jumped 56% to $178 million. Both easily beat. For 2021, Datadog guided low on EPS and up on sales. Datadog said it has acquired two startups, Sqreen and Timber Technologies.
Paycom Software (PAYC) reported Q4 earnings dipped 2% but topping views. Revenue rose 14% to $221 million, in line. Its March quarter revenue forecast came in at $271 million, edging by estimates.
Cybersecurity firm Rapid7 (RPD) lost 7 cents a share vs. a 3-cent profit a year earlier, just beating views. Revenue rose 23.5% to $113.2 million, topping estimates. Rapid7 announced the acquisition of Alcide, a provider of Kubernetes security, for about $50 million.
Alvara (AVLR) reported a 9-cent per share profit vs. a 3-cent loss in the year-earlier period. Revenue jumped 34% to $144.8 million, including acquisitions. Both beat views.
EA, Zynga Prove Mobile Games Hot
Electronic Arts (EA) plans to buy Glu Mobile (GLUU) in a $2.1 billion deal to bulk up its mobile games business. Smartphone games make up the largest and fastest-growing segment of the video game market. Mobile games publisher Zynga (ZNGA) spiked after Q4 EPS surged 66% while sales climbed 61%.
Take-Two Interactive Software (TTWO) earnings fell 24% and sales slid 8%, but that topped views while the video game maker also guided higher. But shares fell.
Uber, Lyft Deliver Mixed Results
Uber beat expectations on loss per share but falling short on revenue. Its food delivery business boomed, jumping 130% from a year ago to $10.1 billion, but its ride-hailing business fell 50% to $6.8 billion. Uber’s net losses amounted to $6.77 billion for all of 2020. Lyft jumped as it beat expectations on revenue and loss per share. It showed 12.55 million riders in the quarter, missing expectations of 13.2 million. The company said surging coronavirus cases hurt demand near the end of the quarter. Lyft does not have a food delivery business.
News In Brief
Bumble (BMBL) jumped 63.5% in Thursday’s debut to 70.31. That’s after pricing its IPO above range and boosting the offering by 5 million shares, to 50 million. The company’s two dating apps, Bumble and Badoo, which together draw more than 40 million users a month.
Twitter (TWTR) beat profit estimates as revenue climbed 28%. The social site ended the quarter with 192 million daily active users, up 72%, but falling short of views. Shares surged.
Enphase Energy (ENPH) beat views and guided high on Q1 revenue. But the solar power product firm also said it’s being affected by the global chip shortage. Shares initially spiked higher but then gave up gains.
Affirm Holdings (AFRM) topped revenue expectations for its quarter and issued an upbeat forecast. Affirm’s gross merchandise volume rose to $2.1 billion, above the FactSet consensus of $1.7 billion. The payments firm raised $1.2 billion in its IPO last month.
Palantir (PLTR) and IBM (IBM) announced a global partnership. That aims to speed corporate adoption of artificial intelligence software.
IRobot (IRBT) earnings rose 22% as sales grew 28% to $544.8 million. The home cleaning robot maker raised expectations for the current year. Shares jumped.
Sonos (SONO) earnings grew 58% in the holiday quarter with revenue up 15% to $645.6 million in the holiday quarter for the premium speaker makers.
Medical aesthetics company InMode (INMD) reported adjusted earnings of 94 cents per share on $75.2 million in sales, growing a respective 60% and 104% year over year.
MGM Resorts (MGM) reported smaller-than-expected loss with sales down 53% to $1.49 billion. Gambling app BetMGM’s net revenue for 2020 was $178 million, while operating losses were $62 million. Shares fell after earnings but rose for the week.
Cisco (CSCO) topped fiscal Q2 adjusted EPS and revenue estimates, but shares fell on in-line earnings guidance.
Trupanion (TRUP) reported a wider-than-expected Q4 loss while the recent pet insurance IPO’s revenue grew 35% to $142.69 million.
Azek (AZEK) reported a 650% EPS gain with revenue up 28% to $212.3 million, both beating views with growth accelerating for a second straight quarter. Shares of the fake-wood decking materials maker rose to a new high.
Chegg (CHGG), an online education platform, beat fourth-quarter earnings forecasts and gave bullish guidance, as it builds off a pandemic-fueled rise in remote learning. Shares soared.
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