Week In Review: Apple, Facebook, Tesla Fall On Earnings; Oil Dives

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The S&P 500 index and other major averages rose slightly through Thursday, even as Apple (AAPL) and Facebook (FB) dipped on earnings, Tesla (TSLA) tumbled on its wider loss, U.S. auto sales fell again and crude prices crashed to five-month lows.

Stocks Hold Steady Amid Headwinds

The Dow Jones industrial average, S&P 500 index and the Nasdaq composite were fractionally higher through Thursday, despite some big headwinds. Apple, a Dow component, along with Facebook and especially Tesla, pulled back following quarterly reports. Crude oil futures tumbled to their lowest levels since November, dragging down energy stocks. Metals prices also fell sharply, hitting miners. General Motors (GM) and other automakers reported declining U.S. sales yet again. Fiber optic stocks warned of sluggish China demand, but cited booming growth in the U.S.

Apple Beats Earnings Views, But iPhone Sales Lag

Consumer electronics giant Apple (AAPL) earned $2.10 a share, up 11% year over year, on revenue of $52.9 billion, up 5%, in the March fiscal second quarter. Analysts expected $2.02 and $52.97 billion. It sold 50.76 million iPhones last quarter, below views for 52 million. CEO Tim Cook blamed the slowdown in iPhone sales on consumers delaying purchases because of speculation about the next-generation device, the rumored iPhone 8. But Apple hiked its dividend and added $50 billion to its stock buyback program.

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Apple Beats Views On Earnings, Comes Up Short On Sales

Facebook Crushes Views

Revenue rose 49% to $8.03 billion, beating the consensus estimate of $7.83 billion, with GAAP earnings up 73% to $1.04 a share, both beating views. Monthly and daily active-user growth also exceeded expectations. Facebook once again cautioned that ad revenue growth will slow "meaningfully." Shares edged lower Thursday.

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Tesla Is At A Loss

Tesla showed a larger loss than expected but strong revenue growth with first quarter earnings. Tesla revenue rose 6% to $2.7 billion, beating the Wall Street estimate of $2.6 billion. Yet the luxury electric-car maker reported an adjusted loss of $1.33 a share, exceeding the 81-cent-per-share loss that Wall Street expected. CEO Elon Musk said Model 3 plans are on track and said robot software could one day make Tesla as valuable as Apple. Tesla shares tumbled Thursday, extending losses from before the results.

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Tesla Gets Mixed Reviews From Analysts After Earnings Report

U.S. Autos Slump: Worst Since 2009

Meanwhile, U.S. auto sales for April missed views across the board Tuesday, with General Motors, Ford (F), Fiat Chrysler (FCAU) and nearly all its foreign peers reporting declining demand and missing views. Auto sales have fallen year-over-year for four straight months, the longest string since the recession ended in 2009. Industrywide, U.S. sales came in at an annual rate of 16.88 million, according to Autodata, below the expected 17.1 million.

Auto parts giant Delphi (DLPH) soared Wednesday after reporting strong earnings and announcing plans to spin off its powertrain segments to focus on autonomous and electric vehicles.

Cable Ads, Subscribers Tumbling

Hollywood writers and studios brokered peace, avoiding a writers strike. But media stocks got slammed after Time Warner (TWX) reported soft ad revenue and subscriber losses. Dish Network (DISH) had mixed results that were marred by subscription losses, which were high industrywide in Q1. Viacom (VIAB) beat handily and Paramount performed well but shares were hit by cable-bundle distribution worries. Hulu debuted a 50-channel live-TV beta bundle for $40 a month, joining several other streaming TV offerings. CBS (CBS) results came in mixed.

Airlines Survive Congress

A House panel scolded airlines to treat customers better, but there were no signs that lawmakers planned legislative remedies. The hearing followed a well-publicized video of police dragging a United Airlines (UAL) passenger off a flight — an incident Rep. Steve Cohen said "reminded me of a Trump campaign rally." An Alaska Airlines exec said the company was reviewing policies like overbooking, while American Airlines (AAL) said it hadn't established a ceiling on payouts offered to people it needs to bump from flights. Southwest (LUV), which plans to end overbooking, said it wouldn't go broke as a result. But even as lawmakers battered executives, airline stocks soared on Delta Air Lines (DAL) traffic results for April, which showed positive unit revenue despite storms in Atlanta.

Optical Firms Warn On China; Does It Matter?

Oclaro (OCLR), Inphi (IPHI) and Lumentum (LITE) all warned of slackening demand in China, the clearest signs yet that the key market for fiber-optic gear and components was struggling. But they generally saw it as temporary, while touting strong demand in U.S.-based data centers and metro broadband expansions. Oclaro, which initially crashed Wednesday morning, ended the day flat. Inphi did lose 11% that day. Lumentum actually rallied 10% Thursday as it cited progress in 3D sensors amid Apple iPhone speculation. Applied Optoelectronics (AAOI) rose after beating already-raised earnings estimates.

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Lumentum Has Apple iPhone 3D Sensor Design Win In The Bag: Analyst

Oil Prices Crash

Amid growing doubts that OPEC-led production cuts will offset booming U.S. sales, crude prices tumbled to the lowest level since before the cartel began curbing output. Meanwhile, BP beat Q1 estimates while Royal Dutch Shell (RDSA) topped views on a massive increase in cash flow. ConocoPhillips (COP) reported a surprise loss. Shale producers were a mixed bag. Pioneer Natural Resources (PXD) highlighted new drilling techniques including the possibility of employing artificial intelligence in the near future.

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As Oil Crashes, This Chart Shows Why OPEC Is Trapped

Merck, Pfizer Mixed

Dow component Merck (MRK) on Tuesday topped Q1 views with $9.43 billion in sales and 88 cents EPS, but lighter-than-expected sales of immuno-oncology drug Keytruda weighed on the stock which closed up a fraction. Pfizer (PFE) sales of $12.78 billion was light, but adjusted income of 69 cents beat by 2 pennies. Regeneron Pharmaceuticals (REGN), on Thursday, missed sales and EPS views, but $1.34 billion in Eylea sales and $36 million in Praluent sales were less dire than expected.

Mixed Week For Restaurants

Yum Brands (YUM) and Papa John's (PZZA) put out earnings that beat estimates, helped by Taco Bell, which Yum owns, and digital ordering, which has been great for the pizza business. Shake Shack (SHAK) sank on weak same-store sales and guidance, while Dunkin' Brands' (DNKN) sales missed amid an "increasingly-challenging environment for retail and restaurants." Wingstop (WING) surged after beating estimates and hiking its EPS full-year growth forecast. Cheesecake Factory (CAKE) tumbled after its miss; Habit Restaurants (HABT) had mixed results and guidance.

In Brief

Sprint (S) said fiscal Q4 revenue operating revenue rose 5.8% to $8.54 billion, topping views while postpaid phone subscriber additions of 42,000 were in line. The stock fell on disappointing free-cash-flow guidance as speculation over a T-Mobile US merger cools.

Paycom Software (PAYC) reported Q1 EPS and revenue that topped views and raised its full-year revenue outlook to $427 million, up 19% from a year earlier, from $423 million.

Square (SQ) stock rose after the payment processor swung to an adjusted 5-cent profit in Q1 from a year-earlier loss and raised full-year revenue guidance. Q1 revenue rose 22% to $462 million, topping views. EBITDA was $27 million vs. consensus estimates of $17.7 million. Square shares soared to a record high.

Twilio (TWLO) shares crashed after the communications software maker forecast a larger than expected current quarter loss and revealed a "change in relationship" with its largest customer, ride-sharing giant Uber. Twilio reported an adjusted Q1 loss of 4 cents per share, on a 47% revenue gain to $87.4 million, ahead of expectations.

Match Group (MTCH) reported Q1 revenue of $299 million, up 15% from a year earlier, and adjusted EBITDA of $86.2 million, both topping views amid strong growth in paid subscribers at mobile dating app Tinder. Management guided Q2 revenues to be in the $303-313 million range vs. consensus of $312 million.

Casino stocks rallied on news that Macau gaming revenue rose 16% in April vs. a year earlier, higher than most estimates. Melco Resorts (MLCO) reported better-than-expected earnings, following upbeat reports last week from Wynn Resorts (WYNN), MGM Resorts (MGM) and Las Vegas Sands (LVS).

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