This week is the SuperBowl of earnings with 4 of the 7 Magnificent 7 mega-caps (Meta Platforms, Tesla, Microsoft, and Alphabet) reporting this week. As noted a couple of weeks ago,
“The bar for the top 10 stocks is quite high. 2024 bottom up consensus EPS revisions are +18% for the top 10 S&P stocks, but -6% for the other 490 companies”
DataTrek’s Nick Colas wrote that without the 5 Big Tech names, S&P 500 earnings would be down 6.0% in Q1 rather than the consensus estimate of +0.5 pct growth: “AMZN, GOOG, META, MSFT and NVDA are the difference.”
As such, mega-cap earnings this season are crucial.
Meta Platforms just reported earnings after the close and at the headline level they were mostly better than expected:
- META PLATFORMS 1Q AD REV. $35.64B, EST. $35.57B
- META PLATFORMS 1Q EPS $4.71, EST. $4.30
- META full-year capex expected to be $35-$40 billion, up from prior range of $30-$37 billion
However, the stock is currently down over -12% in afterhours.
META (15m w/ afterhours)
What gives? It’s not what a company did, it’s what they’re going to do moving forward and Meta is an excellent example. forward guidance was light.
Meta expects revenue in the second quarter of $36.5 billion to $39 billion. The midpoint of the range is $37.75 billion and is below analysts’ average estimate of $38.3 billion.
Considering the NASDAQ-100 has come to depend on a handful of heavily weighted mega-caps as NASDAQ-100’s breadth shows…
NASDAQ-100 (daily) off the October lows and the percentage of NDX component stocks trading below their 50-day is nearly the same as when the index was 24% lower.
NASDAQ-100 (daily) and the percentage of NDX component stocks trading above their 200-day.
The index has been hollowed out and counting on a half dozen stocks to prop it up, stocks like Meta. This isn’t good news for the NASDAQ-100, or Meta.