Netflix reported disappointing subscriber growth and underwhelming Q3 expectations in its earnings release last night. This morning the stock tumbled over 7% as investors reassess this stock’s fair valuation.
Is this a foreshadowing of what is to come from the most parabolic tech stocks this earnings season?
Tech stocks have seen an unprecedented valuation push from the March lows. The trillion-dollar trio, aka Apple (
AAPL Quick Quote AAPL - Free Report) , Amazon ( AMZN Quick Quote AMZN - Free Report) , Microsoft ( MSFT Quick Quote MSFT - Free Report) , has been pushed to valuation multiples that these growth powerhouses haven’t seen in other a decade.
The ripping tech rally the past 4 months has been mostly justified with the world compressing
5 years of digitalization in 5 months and the Federal Reserve extending the low-interest-rate environment. Still, the market euphoria has launched many of these tech stocks through price targets like a rocket through the atmosphere.
These price targets need to either be risen (again) or the market needs to correct. Earnings season is going to put valuations and investors tenacity to the test.
Will investors/traders pull profits once they see what they wanted, good or bad, or will this crazy rally continue?
This summertime quarterly results palooza is as good a time as any for investors to start readjusting their portfolios and roll some of their secular growth profits over to underperforming cyclical names.
These next two weeks of earnings will be critical to the direction that the market takes next. Below is a chart providing all the key reports to keep an eye on.
IBM, NVS, KO, TXN, LMT, ( MSFT Quick Quote MSFT - Free Report) , TSLA, ( AMZN Quick Quote AMZN - Free Report) , ( INTC Quick Quote INTC - Free Report) , ( T Quick Quote T - Free Report) , ( VZ Quick Quote VZ - Free Report) , SAP, NXPI, V, ( PFE Quick Quote PFE - Free Report) , AMGN, MCD, RTX, SBUX, FB, PYPL, ( SNY Quick Quote SNY - Free Report) , SHOP, ( BA Quick Quote BA - Free Report) , QCOM, ( AAPL Quick Quote AAPL - Free Report) , GOOGL, PG, MA, ( CMCSA Quick Quote CMCSA - Free Report) , MRK, ( XOM Quick Quote XOM - Free Report) , ABBV, ( CVX Quick Quote CVX - Free Report) , CAT The Takeaway
Amid this next couple of weeks of crucial earnings, I advise you to be cautious with your investment/trading decisions. We are experiencing one of the most unprecedented markets in history, with Q2 earnings expected to undergo the worst decline in over a decade while stocks drive towards all-time highs.
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