The S&P 500 snapped a three-day losing streak over the past week as Tesla (TSLA:NASDAQ) racked up its best day in over decade following the electric vehicle maker's better-than-expected quarterly results. Next week will be a big one for tech earnings with Alphabet (GOOG:NASDAQ), Microsoft (MSFT:NASDAQ), Meta Platforms (NASDAQ:META) and Amazon (MSFT:NASDAQ) and Amazon (AMZN:NASDAQ) are set to report earnings next week.
Round 30% of S&P 500 companies have reported Q3 results so far, with 81% beating expectations, according to data from the LSE.
US markets have been spooked by rising treasury yields as investors position for slower rate cuts by the Federal Reserve, while the odds are narrowing around a Donal Trump return to the White House.
TESLA
After falling by nearly a fifth over the last month ahead of third quarter results, Tesla shares popped 22% on Thursday (24 Oct), their biggest daily gain in over a decade as the EV maker smashed Wall Street’s profit forecasts.
The share price rally added more than $80 billion to the company’s market capitalisation, taking the gain for the year to 5% compared with a 25% advance for the Nasdaq Composite index.
Revenue grew 7.8% to $25.18 billion, shy of the $25.47 billion expected, while adjusted EPS (earnings per share) of $0.72 handsomely beat consensus estimates of $0.59, marking the first quarterly year-on-year growth of 2024.
Prior to the update analysts were expecting the company to report its worst annual net profit since 2020, implying a drop of more than 45% over 2022.
Tesla said it expected a slight increase in vehicle deliveries for 2024 against consensus forecasts for a fall. Musk predicted deliveries would grow by between 20% to 30% in 2025 and Telsa expects to launch its self-driving robotaxi service in California and Texas in 2025.
STARBUCKS
Starbucks’ (SBUX:NASDAQ) shares plunged after the coffee chain behemoth suspended its full year 2025 outlook in an unscheduled update (22 October), having endured its third consecutive quarter of declining same-store sales.
However, the stock finished the week 3% to the good at $98.3 on hopes new CEO Brian Niccol has ‘kitchen-sinked’ the bad news and reset the expectations bar for the Seattle-based business. Fourth quarter global comparable sales fell 7%, worse than the 3.5% drop Wall Street expected with sales down in the US and China alike.
This sent the Cappuccino seller’s earnings per share 25% lower year-on-year to 80 cents, way below the $1.03 analysts expected. ‘Our fourth quarter performance makes it clear that we need to fundamentally change our strategy so we can get back to growth and that’s exactly what we are doing with our “Back to Starbucks” plan,’ insisted Niccol.
COCA-COLA
Hopes wouldn’t necessarily have been that high for soft drinks giant Coca-Cola’s (KO:NYSE) earnings after PepsiCo (PEP:NASDAQ) served up a disappointing set of numbers earlier this month.
However, in continued evidence of the Coca-Cola’s pricing power its third-quarter output was ahead of expectations on higher prices.
Revenue was $11.9 billion, against the $11.1 billion which had been pencilled in, and adjusted earnings per share totalled $0.77 against the forecast $0.74. The company expects full-year organic revenue growth of 10%.
Volumes were down 1% in the quarter, showing the company isn’t immune to sluggish consumer demand, the company observed that people were buying fewer big packs of Coke and opting for smaller size drinks in fast-food restaurants.
Coca-Cola is hopeful of an improvement in China, where sales have been weak, once the impact of recent stimulus packages comes through. Investors will be watching the 2025 outlook closely when the company reports its fourth-quarter earnings in January with currency headwinds already having been flagged.
