The quarterly reports of Alphabet-Google and Microsoft weigh down the Nasdaq, which immediately falls by more than 2% at the start of the session. The two Big Tech have announced financial results that have been rejected by the market.
The sell-offs hit both stocks, with a contagion effect affecting other stocks in the technology sector, such as Meta Platforms and Amazon, which fell by around 4%.
At 3.45pm Italian time, the Dow Jones is flat, up just 0.08% to around 31,861 points; the S&P 500 fell 0.69% to 3,832, while the Nasdaq Composite lost 1.70% to 11,006 points.
Among the blue chips, Boeing stands out, gaining 1%, despite the US aerospace giant announced that it has ended the third quarter of the year with an unexpected loss.
The US giant reported a loss per share of $ 6.18, compared to the 7 cents per share expected by the consensus.
Boeing grossed $ 15.96 billion in revenue, significantly less than the consensus estimated $ 17.76 billion.
Returning instead to the two great protagonists of the last few hours, Alphabet, the holding company to which Google belongs, announced that it had reported lower than expected profits and turnover in the third quarter of the year, communicating at the same time the decision to slow down the growth in hiring. Alphabet eps came in at $ 1.06, less than the expected $ 1.25, according to Refinitiv estimates. Revenue was $ 69.09 billion, less than the expected $ 70.58 billion; YouTube ad revenue stood at $ 7.07 billion, less than the expected $ 7.42 billion, according to StreetAccount estimates; Google Cloud division revenue was $ 6.9 billion, better than the expected $ 6.69 billion. Traffic acquisition costs were $ 11.83 versus $ 12.38 expected. The Alphabet stock slipped by more than -7%.
Negative reaction to the publication of the quarterly also by Microsoft, with the prices slipping by about 7%.
The American Big Tech announced that it ended the third quarter of the year with better than estimated profits and revenues; however, the cloud division’s revenue fell short of expectations, as was the guidance provided by the giant. Specifically, earnings per share stood at $ 2.35, better than the $ 2.30 per share expected by analysts interviewed by Refinitiv. Revenue was $ 50.12 billion, better than the expected $ 49.61 billion.
However, regarding the guidance, Microsoft has announced that it estimates for its fiscal second quarter (fourth quarter of the year), revenues of between $ 52.35 billion and $ 53.35 billion, up 2% taking into account the half. of the expected range. Analysts had instead expected revenue of $ 56.05 billion. In addition, Microsoft’s gross margin stood at 69.2% in the third quarter (fiscal first quarter), disappointing StreetAccount’s outlook of 69.8%.
Special note is also Meta Platforms, which will publish the accounts for the third quarter today, after the end of the trading day.
Meta Platforms will announce the third quarter accounts tomorrow, Wednesday, October 26, after the end of the session on Wall Street.
Zacks’ consensus predicts earnings per share at $ 1.82, down 43.5% yoy, on revenue of $ 27.44 billion, down 5.4% yoy.
In recent days, the Bank of America sting has come, with analyst Justin Post who has revised down the rating on Meta from “buy” to “neutral”, citing fears related to the trend in advertising revenues, competition and ambitions on the metaverse.
The 12-month target price was cut from the previous $ 196 to $ 150.
Meta Platforms stock was among the 5 worst performers in the entire S&P 500, taking a loss of -59.66% in the first nine months of 2022.
Since the beginning of the year, the flight from Meta shares has resulted in a drop of -61.5%, compared to the decrease of about 30% in the Nasdaq 100 index, while from the day of the announcement concerning the decision to change the name from Facebook to Meta, or from 28 October 2021, the fall was equal to -59%.
The day before yesterday, Meta’s long-term shareholder, Altimeter Capital Management, blurted out, sending an open letter to the top of the American company, signed by the president and CEO of the investment company, Brad Gerstner.
Gerstner wrote in black and white that Meta has too many employees and that it is moving too slowly in trying to maintain (and it should be said, also restore) investor confidence. The advice to get back up? Cut the staff by 20% and put a damper on the expenses that the group is making, investing too many green bucks in the technology of the metaverse which, according to many other market experts, is becoming the obsession of the CEO of Meta, Mark Zuckerberg.