Apple stock slumps despite earnings beat as Amazon dumps on Rivian loss

The big earnings day this week was Wednesday with two tech titans looking to save the market. Instead, it looks like it was Facebook's parent company Meta (FB) that managed to do that as mediocre earnings were enough to trigger a relief rally that permeated across the tech sector on Thursday. Apple (AAPL) then posted strong earnings and everything looked bullish once again as the S&P 500 held the important support, at $415 in SPY, see chart below.

SPY chart, daily

So really it was a case of the good, the bad, and the ugly. I doubt anyone will get that reference but pat yourself on the back if you do. Actually don't pat yourself too hard because if you get that reference then you are clearly not as young as you once were! Scroll down for the obvious answer.

Apple (AAPL) stock news: The Good

Apple posted really strong earnings. Earnings per share came in at $1.52 versus the $1.43 estimate. Revenue hit $97.3 billion versus the $94 billion estimate. Apple said it was raising its dividend to 23 cents per share and increasing its share buyback program by a cool $90 billion as you do! Apple (AAPL) stock popped straight away. iPhone revenue surged on demand for the iPhone 13 and subscriber growth was also strong with 825 million subscribers up from 785 million last quarter and 660 million last year. Nice work but then it all went downhill on the conference call, as CEO Tim Cook and CFO Luca Maestri were both quite downbeat on the future: 

"Supply constraints caused by COVID-related disruptions and industry-wide silicon shortages are impacting our ability to meet customer demand for our products. We expect these constraints to be in the range of $4 billion to $8 billion which is substantially larger than what we experienced during the March quarter. The COVID-related disruptions are also having some impact on customer demand in China."

It was likely this comment on the conference call from CFO Luca Maestri that saw Apple (AAPL) stock quickly slump 4% in the after-hours market. It has since not recovered.

Apple (AAPL) stock chart, daily

Amazon (AMZN) stock news: The Bad

If Apple was the Good, now let's get onto the Bad. Amazon posted earnings too after Thursday's close. Earnings per share (EPS) missed, coming in at $-7.56 versus the $8.07 estimate. Revenue was in line at $116.4 billion. Guidance also missed estimates. Revenue was the next quarter is guided at $118.5 billion when analysts had expected $125.2 billion. Amazon CEO Andy Jassy said that "with AWS growing 34% annually over the last two years, and 37% year-over-year in the first quarter, AWS has been integral in helping companies weather the pandemic and move more of their workloads into the cloud".

We had correctly forecast this strong performance from AWS due to the read-across from Microsoft's Azure cloud business earlier this week, but the decline in operating income and free cash flow was surprising. AMZN stock fell 8% in the after-hours market and has remained lower in Friday's premarket.

Amazon (AMZN) stock forecast: The Ugly?

Now onto the Ugly. Rivian stock has been under pressure this year as have most high-growth names. RIVN stock is down nearly 70% this year. With Amazon having a large stake in Rivian it was no surprise to see Amazon take a $7.6 billion loss on its Rivian (RIVN) stake. Truly ugly.

We posted before earnings that $2,700 was the must hold level. Well, it didn't hold after those earnings, naturally. $2,400 now is the next target and then more likely $2,000. Decent volume at both levels with volume gaps in between to speed the move. 

 

AMZN stock chart, daily

"The Good, the Bad, and the Ugly" was a Clint Eastwood classic. Clint Eastwood, anyone, anyone. Ok, so I have to explain that one too. Really old, tough-guy movie star! Wow, that must mean I'm really old then! Keep that under wraps in case my editor finds out, he never reads down this far anyway!