Roku Rockets as a New Generation of Tech Shoots Higher: Earnings This Week

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Roku Rockets as a New Generation of Tech Shoot Higher: Earnings This Week

Last year was all about weakness in giant tech stocks. This year could be all about the next generation of high-flying growth names.

The last week of earnings featured breakouts in two newer companies whose technology continues to win new users. First, Match (MTCH) shot to new all-time highs after its Tinder app grew at a stunning 40 percent clip. Earnings, revenue and guidance all blew past expectations.

Then last night Roku (ROKU) provided its increasing dominance in streaming-video, beating on pretty much every metric. Contrast that with Netflix’s (NFLX) crash only three weeks ago

Did you know ROKU has gained almost 300 percent so far in 2019? That would make it the year’s top performer in the Nasdaq-100 — if only it were a member! MTCH has more than doubled, but it’s not in the index either.

Roku (ROKU) chart with 50-day moving average.
Roku (ROKU) chart with 50-day moving average.

Speaking of new technology stocks, Pinterest (PINS) surprised to the upside in its second report as a public company. Management also raised guidance as new advertisers joined the social-media company. Following rallies in Snap (SNAP) and Twitter (TWTR) recently, you have to wonder if investors are shifting capital away from Facebook (FB) into smaller names.

Older Techs Stage Comebacks

But it wasn’t all about the new. Some older technology stocks also showed signs of a comeback.

Take-Two Interactive (TTWO) rose the most since October after “NBA 2K” and “Grand Theft Auto V” pushed results and guidance ahead of estimates. So far, TTWO has rebounded the most of among video-game makers after Fortnite upended the market last year.

Next, Bookings (BKNG) tried to get back on track after a year of weakness. Not only did it rally on strong results for the second straight quarter. The parent of Priceline.com also enjoyed better direct traffic and adoption of its merchant platform.

Lyft Accelerates After Results

Ride-sharing newcomer Lyft (LYFT) surged on the heels of its second quarterly report as a public company. While its backward-looking numbers were strong, analysts said real story was a potential end to its price war against Uber Technologies (UBER).

Avalara (AVLR) was another relatively new tech stock that spiked on better-than-expected results. The provider of tax-compliance software, which only went public in June 2018, has more than tripled this year.

Disney, Kraft Hammered

While new companies gained traction, some older firms struggled. Walt Disney (DIS), for example, had a rare double-miss on its top and bottom lines. The media giant cited higher costs associated with its new streaming service and Fox integration. Weak attendance of the “Dark Phoenix” firm also offset the blockbuster “Avengers: Endgame.”

Walt Disney (DIS) chart, with 50-day moving average.
Walt Disney (DIS) chart, with 50-day moving average.

Food giant Kraft Heinz (KHC) crashed amid accounting worries after it wrote down the value of brands including Velveeta and Cool Whip. Private-label competition and post-merger chaos were blamed.

New York Times (NYT) is another old company that’s not getting better with age. The Gray Lady ripped about 50 percent in the first quarter, but then she gave back half those those gains after revenue missed this week.

CVS Staging a Comeback?

CVS Health (CVS) managed to fatten its margins with price increases, resulting its second consecutive bullish quarter. The ailing pharmacy giant also got a boost from President Trump’s July 11 decision not to force drug rebates. Will that help it crawl out from under its mountain of debt? Value investors may look for a comeback in this name.

Comeback was the buzzword at Sealed Air (SEE). The maker of bubble reported consensus-beating profit for the third straight quarter as management’s turnaround plan bears fruit faster than projected.

Square Takes a Beating

Despite some of the winners in technology cited above, others took a beating. Square’s (SQ) gross payments volume missed estimates for the third time this year. While profit beat consensus, that forward-looking indicator of business activity is the key metric investors watch.

NetApp (NTAP), a provider of data-center systems, crashed on weak guidance as it told investors to ignore earlier growth projections. Cyber-security provider Arista Networks (ANET) also gave a glass-half empty view of the future. Both fell more than 12 percent in the last week.

GW Pharmaceuticals (GWPH), on the other hand, had a strong quarter as its Epidiolex epilepsy treatment grew sharply. Did you know the maker of cannabis-based drugs beat Street revenue estimates by more than 50 percent?

SolarEdge Technologies (SEDG) rounds out the list after crushing analysts’ numbers for the second straight quarter. That follows huge moves in SunPower (SPWR) and Enphase Energy (ENPH) last week. Mainstream news outlets might ignore them, but solar stocks remain 2019’s strongest group. Keep reading Market Insights for more under-the-radar trends.

In conclusion, the last week of earnings saw old names like DIS and SQ struggle. But newer stocks like ROKU, MTCH and PINS may be gaining favor.

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