Strong Big Tech Earnings, Small-Cap Redemption(?), and Ethereum Hype

Markets At A Glance

There’s plenty of reasons to be optimistic after a huge week of first-quarter earnings calls. With the majority of the S&P 500 companies now reporting, 87% have beaten estimates, carrying the S&P and Nasdaq composites to new all-time highs. According to Edward Jones, index earnings are now on track to grow 40% in Q1 and 30% for the full year.1 Tech giants Apple, Microsoft, Amazon, Facebook, and Alphabet led the way with impressive quarterly results, and innovators like NIO and Shopify benefited handsomely in share price after exceeding expectations. However, it wasn’t necessarily sunshine and rainbows for everyone at the party. Even after smashing revenue estimates, Pinterest dropped 10% in stock price on Wednesday, and Twitter’s stock price fell 15% on Friday after both companies reported underwhelming user growth. Outside of big tech, small-cap stocks trended upward on some of their best price action since mid-February, bringing hope to holders of individual SPAC, gambling, cannabis, and biotech names.2 Notably, shares of Clover Health ($CLOV), and Churchill Capital Corp IV ($CCIV) both rose 16% in the early days of last week’s rally.

Last week marked the 100 days since the Biden administration took office, and with rising corporate earnings, a positive national employment outlook, and interest rates seemingly locked in place, all of the signs point toward a resilient bull market continuing into the future. Outside of stocks, cryptocurrencies experienced mixed results, with Bitcoin trending slightly downward for the second straight week. The real hero last week was Ether, notching a new all-time high price above $3000 on news that the European Investment Bank (EIB) may launch a digital bond sales on the Ethereum blockchain network.3 Speaking of news, let’s take a look at which tickers were discussed most last week:

Twitter avatar for @Beth_Kindig

Beth Kindig @Beth_Kindig

After the busiest week of Q1 earnings, we take a look at which stocks outperformed revenue estimates the most.$NIO $SHOP $AAPL $FB $AMD $GOOGL $AMZN $PINS $MSFT $TSLA $TDOC

Image

April 30th 2021

126 Retweets604 Likes

What’s Making Headlines

Each week we analyze impactful sentiment metrics expressed in the news to gain insight into each stock and cryptocurrency’s outlook. The amount of optimism in the average article last week was markedly higher (0.15 vs. 0.08) than in previous weeks, and the amount of pessimism expressed was significantly lower (0.03 vs 0.09). This general shift in mood was buoyed by the strong earnings reports and economic outlook mentioned above, though the distribution of sentiment across tickers was noticeably wider. Looking into the distribution of the top-25 most-talked-about tickers below, we can see that the majority of tickers were discussed with considerable optimism; over half of these tickers reported earnings last week, and with the majority of reports highlighting positive financial performance, this optimism makes sense. The amount of reactive language (ie. words referencing past events) was also significantly higher than previous weeks, a direct result of this increase in earnings reports.

In terms of “bullish” sentiment (ie. speculative + optimistic words), the most notable tickers in conversation last week include Qualcomm ($QCOM) and Starbucks ($SBUX) on better-than-expected earnings, and the India Tobacco Company ($ITC) with overwhelming optimism. Though $ITC finished the week trading downwards (and has underperformed the broader market in recent months), the company has received a disproportionate share of positive headlines, and renewed investor interest has led some to claim that it may be a decent value buy, assuming it can straighten out some of its capital allocation issues. In terms of pessimistic sentiment, last week’s dogs include Boeing ($BA) after posting a net loss in Q1 and halting deliveries of the 737 Max, Spotify ($SPOT) after posting disappointing total users numbers, and Pinterest ($PINS) after missing on growth estimates. Let’s dive a bit deeper into a few of these key tickers:

The average sentiment distribution of the top 25 most-talked-about tickers in last week’s news (4/26/21-5/2/21) with respect to each of the sentiment metrics we currently track, and the number of week’s each ticker has been in the top-10 over the past three months.

Qualcomm ($QCOM)

The average article mentioning Qualcomm last week expressed 0.58 reaction, 0.55 speculation, 0.15 optimism, and 0.06 pessimism (all on a scale from 0 to 1, representing the percent of total sentences containing reactive, speculative, optimistic, or pessimistic language, respectively). In fact, it’s difficult to find any bearish articles about Qualcomm this week, and their earnings might explain why. Over the past three years, the company’s EPS have taken off like a rocket, starting low and gaining quickly, and finishing this year up 67% from $3.56 to $5.94. This growth was primarily driven by an increase in operating income across their semiconductor and software lines of business. For each respective segment, Qualcomm CDMA Technologies (QCT) increased revenues by 53.2%, and Qualcomm Technology Licensing (QTL) increased revenues by 50.6% over the past year. The company continues to gain market share (from competitors like Huawei), the current global chip shortage may squash some of Qualcomm’s potential upside in the near future. Important $QCOM headlines this week include:

  • “Here’s Why I Think Qualcomm Might Deserve Your Attention Today” | Simply Wall St
  • “While enamored by #FAANG earnings, we were happy to see progress in $QCOM… “ | The Buylyst on Twitter

Pinterest ($PINS):

The average article mentioning Pinterest last week expressed 0.79 reaction, 0.46 speculation, 0.06 optimism, and 0.15 pessimism on a 0 to 1 scale. This is a drastic change from the company’s bullish discussion in conversation in recent months, driven primarily by a few key takeaways in last week’s earnings report. First, Pinterest continues to lose money, reporting negative earnings of $22M in Q1 (though this is a significant increase from their $141M loss posted in Q1 2020). Second, even with a 30% increase in monthly active users, company executives warned that growth may slow considerably as the economy reopens in the coming months. This caused a selloff of more than 10%, bringing $PINS stock price close to $70 per share. The value proposition of Pinterest remains unchanged, and the company plans to increase monetization opportunities within the platform and expand their global reach. While some analysts say the retreat in price is warranted (it continues to sell for about 25x their sales), others say that now may be the perfect time to enter a position for the long haul. Important Pinterest headlines from last week include:

  • “With Plenty of Room to Grow, Wall Street Isn’t Putting a Pin In Pinterest” | TipRanks
  • “Should Investors Worry About Pinterest’s Slowing User Growth?” | The Motley Fool

The Good, The Bad and the Speculative…

Aside from these key tickers, below we take a quick look at which tickers scored the highest (and lowest) for each of the sentiment metrics we currently track.

Ticker Optimism😀 and Pessimism😒

In terms of mood, here are the most optimistic and most pessimistic tickers discussed in last week’s news. Agnico Eagle Mines ($AEC) was spoken of with high degrees of optimism after beating estimates in last week’s report, with earnings up 19.64% and a new record in terms of quarterly gold production. General Electric ($GE) also impressed in their latest earnings report, raising nearly $1B through their recent sale of Baker Hughes stock and becoming and comfortably topping profit estimates. In terms of pessimism, HSBC Holdings ($HSBC) was disproportionately pessimistic in conversation last week despite soaring first-quarter profits (up 79%); much of the company’s outlook is highly dependent on the global recovery timeline and international vaccine rollouts. The ARK Innovation ETF ($ARKK) was also highly pessimistic in last week’s news with share prices pulling back in recent weeks; some analysts worry about the rising number of assets under Cathie Wood’s management may bring new challenges to the ETF. Finally, Chevron ($CVX) ends the week with high degrees of pessimism after mixed earnings results, in part driven by the rising price of oil. Here’s the complete breakdown of optimistic and pessimistic tickers in last week’s news:

The complete visualization of the top-10 most optimistic and pessimistic tickers in last week’s news articles (4/26/21-5/2/21) broken down by their relative mood (normalized optimism vs. pessimism expressed) and absolute mood (% of optimism or pessimism expressed outright with respect to each ticker).

Ticker Reaction😮 and Speculation🤔

In terms of time-sense expressed, last week’s most reactive (ie. past-oriented) tickers in conversation also include $AEM and $HSBC after their recent earnings (as mentioned above). JPMorgan Chase ($JPM) was also heavily reacted to after last week’s earnings as they beat profit estimates and experience a few strong trading days last week. Ripple ($XRP) was also highly reactive last week, as it now accounts for 3% of the total crypto market. In terms of speculation, the most speculative tickers in conversation this past week included W&T Offshore, Inc. ($WTI) and Spotify Technology ($SPOT) after recent earnings, and Roku ($ROKU) in anticipation of their upcoming earnings report this week. Here’s the complete breakdown of this week’s most speculative and reactive tickers:

The complete visualization of the top-10 most reactive and speculative tickers in last week’s news articles broken down into relative time-sense (normalized speculation vs. reaction expressed) and absolute mood (% of speculation or reaction expressed outright with respect to each ticker).

Looking Ahead

Last week was truly action-packed. Moving into this week, we look forward to remaining earnings reports to add to this week’s optimism. A complete list of this week’s earnings calls can be found here from @eWhispers on Twitter. Expect continued strong performance from value stocks, and the potential for more positive small-cap movement. Overall, the economy is showing signs of continued positivity, and as we move closer to a post-COVID-19 market, the bull market is set to continue into the coming months. Stay tuned this week for our monthly roundup of everything that we saw in the news in April, and as always, thanks for reading! 🙏

Subscribe to the newsletter
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Don't miss these stories: