Best January For Stocks Since 2019

Another quarter, another post about Snap’s disappointing earnings results. In what seems to be a tradition at this point, the company missed revenue expectations but beat on earnings. 

CNBC recaps the key numbers below:

The challenging macro environment has pressured ad sales and caused many companies, including Snap, to retrench and manage expenses. Given the macroeconomic headwinds, platform policy changes, and increased competition that executives blamed for current results aren’t going anywhere, it could be another tough year for the company. 😬

Additionally, the company declined to provide guidance for the third straight quarter. Instead, it told investors that it’s refocusing investments to concentrate on growing community and engagement, accelerating and diversifying its sales growth, and developing augmented reality technologies.

Essentially, that means they’re trying to run a better business. So far, investors are disappearing faster than the app’s messages, with $SNAP shares falling 14% after hours. 📉

Meanwhile, Spotify managed to deliver fourth-quarter results that were “music to investors’ ears.” 🎧🎶

The company’s loss per share of 1.40 euros was wider than the 1.27 euros expected. But revenues of 3.17 billion euros topped estimates by a hair.

However, what investors were focused most on was Spotify’s 489 million monthly active users, which was up 20% YoY. This included 33 million net additions in the quarter and 205 million paid subscribers, which is up 14% YoY.

Executives continue to cut costs and invest in advertising, with its ad-supported revenue growing to account for 14% of total revenue. That growth was driven by podcasting, an area in the company that’s recently struggled to gain traction in despite its significant investments. 🎙️

While the company still has work to do, investors seem to think it’s on the right path. $SPOT shares rose nearly 13% following the news. 📈

In addition to the above, several other tech names were on the move. 👀

Electronic Arts plunged more than 10% after its results and forecast were below consensus estimates. Executives expect layoffs and shelved mobile versions of two of its popular games.

Match Group fell nearly 10% after the company’s first-quarter forecast failed to impress.

Western Digital dropped nearly 6% after the company’s forecast fell short of expectations. 

What is a bullish slingshot, and why should we care? Today we’re looking at three tweets from Ryan Detrick of the Carson Group, who is making a bullish case for stocks.

In his first tweet, Ryan noted that January is seasonally a strong month during a pre-election year. And this year didn’t disappoint, with the S&P 500 gaining 6.2% in January. That’s the index’s best January since 2019 (7.9%) and 1989 (7.1%). 📆

In his next tweet, he points out that pre-election years typically see strong first halves of the year as well. Combine that with many Wall Street professionals expecting the opposite, and you’ve got quite the contrarian case. 🐂

In his third tweet, Ryan brings it all home, where he points out that a strong January performance following a negative year has historically yielded impressive full-year returns.

He does note that the sample size is only five times, but all five have been positive, with a median return of 28.9%. 🤩

Much like the contrarian charts we discussed yesterday, it’s hard to decide on these data points alone. Whether or not we see the market truly “slingshot” higher remains to be seen. But at the very least, this historical context gives market participants something to think about as they approach the coming months. 🤔

Semiconductors remain a crucial focus for market participants as a leading indicator for the tech sector and global economy. As a result, when big names in the industry report earnings, they attract a lot of attention. 👀

Today we heard from Samsung Electronics, which saw its quarterly profits fall 69% to an 8-year low of $3.5 billion. Revenues also fell 8% to $57.3 billion. Analysts had expected the poor results given the company’s pre-earnings announcement earlier this month, but these were still difficult for investors to stomach. 🤢

Executives blamed a business environment that significantly deteriorated due to concerns over a global economic slowdown. Its mobile and personal computer (PC) segments suffered as customers adjusted their inventories to reflect the macro uncertainty.

The smartphone and PC weakness is something we’ve seen from most companies this quarter, so that’s not surprising. Unfortunately for Samsung, strength in other segments wasn’t enough to offset that decline. 🖥️

Analysts expect quarterly profits to remain pressured as demand stays soft and memory chip prices continue to fall. Shares of Samsung were down about 4% in U.S. trade.  🔻

Meanwhile, Advanced Micro Devices managed to eke out an upside surprise, beating on the top and bottom lines. 😮

The company’s adjusted earnings per share of $0.69 beat the $0.67 expected. And revenues of $5.6 billion topped the $5.5 billion consensus estimate.

AMD is also facing slowing sales of its PC chips and graphics processors. Its client group segment saw a 51% YoY decline in revenue as its customers have too much inventory of its chips on hand. In addition, its gaming business was also down 7% YoY. However, its 42% YoY growth in data center revenue helped offset this weakness and boost results. ⛅

Executives expect $5.3 billion in sales for the current quarter. That’s slightly below estimates and represents a 10% QoQ decline. They also expect a key metric, adjusted gross margins, to be about 50% in the quarter.

Overall, its “better-than-its-peers” results were enough to keep its stock in the green. $AMD shares were up another 2% after hours. 👍