Bright Spots as Big Tech Disappoints: Earnings This Week

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Naysayers Hapless as Worst-Case Scenarios Prove Elusive

The last week of quarterly results featured bad news from some high-profile stocks, but other names rose in prominence.

Right off the bat, Apple (AAPL) had disappointing iPhone sales and stunned investors by saying it would stop reporting unit volumes on its flagship product. That pretty much erased any positive response to a profit beat and better margins. Multiple analysts downgraded the stock, which also suffered its biggest one-day drop in more than two years.

Like AAPL, electronic-payments firm Square (SQ) had better-than-expected earnings, but its guidance suggested slower growth and greater competition in the future. (This was consistent with the trends cited in last week’s earnings recap.)

Another darling of the growth space, streaming-video provider Roku (ROKU), is experiencing one of its worst drops since going public. Once again, guidance was the culprit.

Twilio (TWLO) chart with 50-day moving average.

But the technology sector did have standout winners among smaller companies. Twilio (TWLO), for instance, ripped to a new all-time high after crushing estimates. Initially highlighted on Market Insights in February, the cloud-computing stock is up nearly 300 percent so far this year.

A pair of e-commerce players in the automobile space also rallied after beating estimates: Carvana (CVNA) and Cargurus (CARG). Both are relatively new firms trying to disrupt a massive and fragmented market.

Etsy (ETSY), another e-commerce upstart, ripped more than 20 percent after surpassing estimates.

Moving on to coffee, did you see the move in Starbucks (SBUX)? It was nothing short of a monster quarter as the iconic hang-out spot successfully raised prices. SBUX enjoyed its best single-session move in over two years and seems to be following a similar trajectory as McDonald’s (MCD).

Two big health-care names also rallied after earnings and revenue beat estimates: CVS Health (CVS) and Humana (HUM). The best sector last quarter, health care was also viewed as a potential winner from Tuesday’s mid-term elections. (Click here for more.)

Discovery (DISCA), a smaller media company that’s quietly outperformed the market all year, continued to rise on positive synergies from its Scripts Networks deal. Short sellers have also gotten squeezed in this name.

Speaking of bears running for cover, L Brands (LB) rose to its highest level since July after strong same-store sales let management raise guidance. This company, the parent of Victoria’s Secret, has had an almost uninterrupted decline for the last two years. Its full results are due November 20. (Click here for more on retailers.)

There was bad news from China, where casino operator Wynn Resorts (WYNN) cautioned of weaker demand in the gambling hub of Macau. Ctrip.com (CTRP), a Shanghai-based online travel company, endured multiple downgrades thanks to a tepid outlook. (Click here for more on Chinese tech firms.)

Ctrip.com (CTRP) chart, with 50-day moving average.

Another hotelier, Marriott International (MAR) had its worst drop in over a year after citing weak demand of its own.

In conclusion, the last week of earnings were mixed. Poor guidance hurt some well-known firms like AAPL, SQ and WYNN. However smaller names like CVNA, ETSY and TWLO suggested that the tech space may still have growth stories.

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