Knock-out earnings from tech mega-caps Apple and Microsoft this week came as a welcome arm round the shoulder for embattled growth investors, with both companies beating Wall Street estimates for revenue and earnings for the three months to 31 December 2021.
Fed chairman Jerome Powell refuses to be drawn on details but the markets are increasingly pricing a rate rise in March 2022, the first increase since 2018 when the S&P 500 was trading far below 3,000. The hike could be even higher than the usual 25 basis points, and investors are bracing for multiple hikes through the year.
Three things about Netflix this week
Bill Ackman, the billionaire hedge fund manager behind Pershing Square (PSH), took a massive $1 billion bet on the streaming giant after the stock's steep two-month plunge. Netflix, largely flat on the week at $374.75, has come under the cosh because of slowing subscriber growth, the number followed mort closely than any other by investors.
In the face of increasingly fierce competition from rival streaming companies, including Disney+, Amazon Prime Video, HBO Max, Hulu and others, Netflix's forecast of 2.5 million new customers this quarter was considerably below analysts' expectations of 4 million.
Slowing subscriber growth comes when production costs are spiralling and Netflix is due to watch a slug of popular shows and films leave its screens this year.
Three things about Tesla this week
Tesla has so far been pretty good at avoiding chip shortages and other supply problems but a warning that supply chain troubles would negatively impact performance in 2022 spooked investors and saw the stock lose 8% on the week at $833.10.
Gremlins in the supply chain are a blow because investors have long been waiting to reap the benefits of the group's operating leverage which should cause profits to rise faster than revenue.
Having revealed earlier this month that annual vehicle deliveries surged 87% to more than 936,000 for 2021, Q4 net profit rose to a record $2.3 billion with operating profit jumping from $575 million to $2.6 billion year-on-year, reflecting higher deliveries with lower per-vehicles costs as well as improved profitability in leasing and services.
That helped offset a 50% rise in operating costs to $2.2 billion as the company builds the new factories, with the doors to its Giga Austin factory in Texas expected to come on stream later in the year.
| Reporting next week | ||||
| Monday | Tuesday | Wednesday | Thursday | Friday |
| NXP | Alphabet | Meta Platforms | Amazon | Bristol-Myers Squibb |
| L3Harris Technologies | Exxon Mobil | AbbVie | Eli Lily | Regeneron Pharma |
| Trane Technologies | PayPal | Thermo Fisher Scientific | Merck & Co | Eaton |
| Otis Worldwide | AMD | Qualcomm | Honeywell | Air Products |
| Alexandra | Starbucks | T-Mobile US | ConocoPhillips | Aon |
| Gilead | Boston Scientiffic | Estee Lauder | Cboe Global | |
| Chubb | MetLife | Ford Motor | DXC Technology | |
| General Motors | Emerson | ICE | ||
| Electronic Arts | Marathon Petroleum | Activision Blizzard | ||
| Match | Cognizant | Fortinet | ||
| IDEXX Labs | Hershey | |||
| McKesson | Microchip | |||
| Ebay | Motorola | |||
| Source: Investing.com (sample of S&P 500 companies) | ||||
Three things about Halliburton this week
It's not often that the energy industry services giant will top the S&P 500 leader board, but the stock came within a whisker of doing that this week after better-than-expected results for the fourth quarter of 2021. Adjusted earnings doubled to $0.36 per share year-over-year, exceeding Wall Street's estimate of $0.34, while revenues rose 32.1% to $4.27 billion, $190 million above estimates.
CEO Jeff Miller said that he is ‘excited’ about what he sees as an ‘accelerating multi-year upcycle’ in a supportive macro industry environment. Miller anticipates growth from across its North America and international operations.
JPMorgan took the hint and upgraded Halliburton, upping its price target to $32 from $30, albeit, just 2.6% above the current $31.18 share price following a 14%-plus rally this week.
‘With an improving supply-demand balance in the NAM pressure pumping market, we think Halliburton is primed to benefit from its leading position and realise net pricing gains,’ JPMorgan said.
| Most traded US stocks this week | |
| Tesla | |
| Apple | |
| Amazon | |
| Nvidia | |
| Netflix | |
| Alphabet | |
| Source: AJ Bell YouInvest |
