The stock market rally pulled back, but largely in growth and tech stocks such as Apple (AAPL) and Tesla (TSLA). Economic recovery hopes boosted many cyclicals, while fast-rising long-term Treasury yields boosted financials. Bitcoin surged to $50,000 and beyond. Twilio (TWLO) was a big earnings winner, as Palantir (PLTR), Mosaic (MOS) and Walmart (WMT) sold off.
Stock Market Rally
The Dow Jones rose 0.1% for the week, as cyclicals and financials fared well. The S&P 500 index dipped 0.7% and the Nasdaq sank 1.6%, though both rebounded from Thursday intraday lows. Many growth names, especially speculative, highly valued stocks, suffered significant losses, though they fared better on Friday. The 10-year Treasury hit a 52-week high, rising sharply. Retail sales and factory data were better than expected, but jobless claims were far above views.
Genetics Stocks Fall On Results
Genetics-focused companies Exact Sciences (EXAS), 10X Genomics (TXG) and Crispr Therapeutics (CRSP) reported deep fourth-quarter losses in the latest week. Exact Sciences reported a 58% sales gain to $466.3 million in sales, while 10X Genomics revenue grew 49% to $112.2 million. Crispr reported scant revenue. All three stocks fell.
Bluebird Bio (BLUE) collapsed to a seven-year low after the company temporarily suspended all studies of a sickle cell disease gene therapy after a patient treated five years ago was diagnosed with acute myeloid leukemia. It also decided to temporarily stop marketing Zynteglo, a gene therapy for beta thalassemia, in Europe and the U.K. because it uses one of the same components as the sickle cell disease gene therapy.
Shopify (SHOP) Q4 earnings, revenue and gross merchandise volume topped estimates as e-commerce continued to boom amid the Covid pandemic, with EPS up 267%, revenue 94% and GMV up 99%. But shares fell modestly for the week as Shopify declined to issue guidance for 2021, suggesting growth will slow from 2020.
Twilio (TWLO) popped as Q4 earnings and guidance topped expectations. Twilio guided high on 2021 revenue but the communications software maker guided for a bigger-than-expected loss due to investments.
Cornerstone OnDemand (CSOD) reported Q4 adjusted earnings of 64 cents a share, topping estimates for 27-cent profit. Revenue rose 38% to $206.9 million, beating views. Cornerstone OnDemand forecast Q1 revenue above the Street’s consensus. Cornerstone makes software for human resource departments to recruit, train and retain employees.
RingCentral (RNG) reported adjusted EPS rose 31% as revenue climbed 32% to $335 million, both beating. The cloud-based maker of software for workplace collaboration and customer support guided high for 2021
Palantir Technologies (PLTR) reported an adjusted profit of 6 cents per share while revenue climbed 40% to $322 million. The provider of data analytics software said government revenue jumped 85% to $190 million, but commercial revenue edged up only 4%. For full-year 2021, Palantir expects revenue growth of 30%, slowing from 2020’s 47% growth, vs. estimates of 31% growth to $1.406 billion. Shares plunged but slashed losses Friday.
Fastly (FSLY) reported a smaller-than-expected adjusted loss as Q4 revenue grew 40% to $82.7 million, just above estimates. Q1 revenue guidance met expectations. Fastly’s internet network increases the speed of e-commerce transactions, business software downloads and video streaming to mobile devices. Shares tumbled.
Roku Posts Surprise Profit
Roku (ROKU) reported a surprise profit of 49 cents, defying Q4 views for a 5-cent loss. Revenue jumped 58% to $649.9 million, as ad impressions more than doubled. The streaming video platform guided to a 51% revenue gain to $485 million in Q1.
Buffett Discloses New Buys, Sells
Warren Buffett’s Berkshire Hathaway (BRKB) took a big new position in Verizon (VZ) and a smaller one in Chevron (CVX), while dumping JPMorgan Chase (JPM), Pfizer (PFE) and Barrick Gold (GOLD) in the final quarter of 2020. While ditching Pfizer, the conglomerate added to AbbVie (ABBV), Bristol-Myers Squibb (BMY) and Merck (MRK), the latest 13F filing shows. Berkshire kept Amazon (AMZN) steady and further trimmed its big Apple (AAPL) stake. The iPhone maker now accounts for roughly 44% of the total Berkshire Hathaway portfolio, down from 48% in Q3. Dan Loeb’s Third Point bought Alphabet (GOOGL) and EV supplier Aptiv (APTV) for the first time. Tiger Global opened positions in IPO stocks DoorDash (DASH), C3.ai (AI) and AirBnB (ABNB). Generally, pioneering online car retailer Carvana (CVNA) was the most popular stock with hedge funds in Q4, while Leaderboard and IBD 50 stocks Apple, Tesla (TSLA) and ServiceNow (NOW) weren’t far behind.
Bitcoin Races Past $50,000
Bitcoin crossed $50,000 and then cleared $56,000 on further signs of support from mainstream corporations. Microstrategy (MSTR), ostensibly a business analytics firm, plans to offer $600 million of convertible debt to buy even more Bitcoin, adding to its holdings of the cryptocurrency. China-based 500.com (WBAI) agreed to buy Blockchain Alliance Technologies Holding Co., a Cayman Islands-based Bitcoin mining and services operator. Bloomberg also reported that Counterpoint Global, a unit of Morgan Stanley (MS) Investment Management, is exploring whether to bet on Bitcoin.
Walmart Misses On Earnings
Walmart (WMT) posted Q4 EPS of $1.39 vs. views for $1.51. It had sales of $152.08 billion, which beat estimates for $148.3 billion. Walmart U.S. Q4 comp sales grew 8.6%. U.S. e-commerce sales leapt 69%, but that’s down from previous quarters. Its Sam’s Club unit’s comps jumped 10.8%, with e-commerce sales up 42%. Walmart sees EPS and sales falling in fiscal 2022 due to divestitures. Walmart sees core sales up in the low single digits with EPS flat to slightly higher. It announced a $20 billion buyback program and raised its quarterly dividend to $2.20 from $2.16. Walmart also said it will raise wages for store workers in digital and stocking positions to $13-$19 an hour, though the minimum starting wage will remain $11.
Fertilizer Makers Chilled
Mosaic (MOS), CF Industries (CF) and Nutrien (NTR) beat quarterly views, with Mosaic giving a bullish outlook while Nutrien raised its dividend and started a buyback program. But CF Industries said that extreme weather in the Plains states is forcing some fertilizer plants to close. Mosaic and CF Industries shares fell sharply on Thursday, though Nutrien held up.
SolarEdge (SEDG) beat estimates on the top and bottom lines as did its first-quarter revenue outlook. SunPower (SPWR) beat on earnings but missed on revenue, as did its first quarter outlook. SunPower tumbled. SolarEdge edged up on earnings, but fell for the week.
Oil Prices Rise As Texas Freeze Hits Output
Oil prices rose as the deep freeze in Texas hit 1 million barrels per day of production capacity, offsetting Saudi Arabia’s announcement that it would reverse its decision to unilaterally cut 1 million bpd from the market in April. The Energy Information Administration reported a 7.3 million-barrel drop in crude stockpiles last week, more than double forecasts. Shale producer Continental Resources (CLR) reported a Q4 loss that was far worse than expected. Revenue fell nearly 30% to $837.6 million, above views. Natural gas producer EQT (EQT) beat views.
News In Brief
Baidu (BIDU) reported Q4 earnings per share fell 19% but topped views. Revenue grew 12% to $4.64 billion, meeting forecasts. Q1 revenue guidance came in above consensus. Baidu is looking for a chief executive for its intelligent electric-vehicle joint venture with Geely.
Tesla (TSLA) slashed the price for its base Model 3 to $36,990 and Model Y to $39,990 in the U.S. Performance Model 3 and Y prices rose to $55,990 and $60,990, respectively. In Japan, the base price of the standard version of a Model 3 was cut to about $40,500 and the long-range version to $47,200.
AutoNation (AN) nearly doubled earnings to $2.43 per share, beating views. Revenue climbed 4% to $5.79 billion on robust truck and SUV sales. The auto dealership’s chief executive called the global chip shortage “significant” for the auto industry.
Animal-health company Zoetis (ZTS) reported adjusted EPS dipped 1% with sales up 8% to $1.81 billion, both beating.
Tilray (TLRY) reported fourth-quarter results that beat some expectations, and the Canadian cannabis producer became the rare weed company to deliver on its profitability goals.
Chip design software maker Synopsys (SNPS) posted a 50% EPS gain with sales up 16% to $970.3 million. But its guidance was mixed.
Analog Devices (ADI) reported a 40% EPS gain with sales up to $1.56 billion, beating estimates. The chipmaker guided high for the current quarter.
Trade Desk (TTD) reported EPS surged 148% to $3.71, nearly double views for $1.88 amid strong growth in internet TV ad revenue. Revenue rose 48% to nearly $320 million, easily beating. The digital advertising firm guided higher on March quarter revenue but declined to provide full-year guidance.
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