It was a bad past week for tech stocks as the Nasdaq 100 lost more than 500 points, or 3.6%, its worst weekly performance since the end of February. The weakness was in response to a more aggressive stance by the Federal Reserve on interest rate rises.
The central bank spent the week priming markets to expect rises of at least 0.5% at each of its next four meetings with rises of 0.75% also being thrown into the mix.
Consumer-facing online businesses such as Doordash (DASH:NYSE), PayPal (PYPL:NASDAQ) and Shopify (SHOP:NYSE) were among the biggest losers.
Alongside them were metals and mining companies, where Alcoa (AA:NYSE) fell 18% over five days and Newmont Corporation (NEM:NYSE) dropped 9%.
The earnings season continued in earnest with results (19 April) from healthcare giant Johnson & Johnson (JNJ:NYSE), which lowered its full year sales and earnings guidance, and household products maker Procter & Gamble (PG:NYSE).
P&G beat third-quarter earnings expectations with its $1.33 trumping the $1.29 anticipated, and raised guidance, lifting its share price 2.8% on the week.
NETFLIX
There had been signs of trouble brewing in recent months but its kitchen sink job on growth, price rises, the prospect of adverts and a new strategy to clampdown on account sharing took everyone by surprise. Yet the question remains, will this be enough? Netflix (NFLX:NASDAQ) has been throwing cash at production
regardless of its quality just to keep its content fresh and ahead of the competition but quantity isn't necessarily what viewers want, with many preferring quality.
Offering a cheaper subscription with adverts was always likely at some point but we'll have to see what effect it might have on subscribers numbers, particularly in more mature markets where growth has ground to a halt and even reversed. The cost of creating shows and films continues to go up and Netflix is spending big on marketing to keep its brand in front of consumers.
The elephant in the room continues to be the ease with which subscribers can leave the service. But even the best investors get it wrong sometimes, and the near 40% slump in Netflix shares on the announcement left egg on the face of billionaire Bill Ackman, facing a hefty loss having bought into the streaming giant just a few months ago.
TESLA
Tesla (TSLA:NASDAQ) shrugged off worries about lockdowns in China and global supply chain traffic jams with rocketing first-quarter profits and a higher production target for the year. Total production in Q1 was 305,407 vehicles, with 310,048 delivered to customers, up 69% and 68% year-on-year, respectively.
This fed through to record Q1 results where revenues came in at $18.8 billion, a rise of 81% on last year and almost $1 billion above Wall Street forecasts. Gross margins increased to produce yet more record profits.
Tesla reported earnings per share of $3.22, up 246% year-on-year and well ahead of the $2.26 consensus forecast. Net profits reached $3.3 billion in the quarter, up seven-fold from a year ago and more than $1 billion higher than the previous quarter.
Tesla began production and deliveries at its Gigafactory Berlin in March and at Gigafactory Texas in April. Both factories are expected to increase the production for Tesla moving forward.
GAP
Clothing retailer Gap (GPS:NYSE) might have hoped the news Old Navy president and chief executive Nancy Green was leaving this week would divert attention from its first quarter sales update but on this occasion it had no such luck.
Instead the market seized on the revised forecast, for sales to decline by mid-teens per cent instead of mid-to-high single digits, and sent the shares lower to the tune of 17% on Friday.
