Shares of Super Micro Computer Inc. (SMCI) fell by 20% on Wednesday following the company’s earnings report on Wednesday night.
The company’s earnings per share missed analysts’ estimations by $1.87, showing an actual earnings per share of $6.25 compared to $8.12 expectations.
SMCI’s Revenue for the quarter came in lighter than expectations as well as their year-over-year revenue grew by 142%. That compares to a 200% growth last quarter and 103 percent the quarter before.
Super Micro Computer’s management raised their guidance for next quarter’s revenue. The company also announced A10 for one stock split that's going to be effective on October 1st.
Investors aren't looking at the revenue guidance or the stock split as a bullish catalyst and said they are looking at the company’s lack of revenue growth and tightening margins.
Valuation has been at the heart of the recent pullback in the AI technology stocks, Supermicro’s results will fuel more speculation that AI stocks are in the process of a major valuation correction.
Supermicro Computer shares are now trading almost 60% lower than their March highs. The stock traded as high as $1200 per share and is now sitting at $500.
The stock just crossed below its 200-day moving average last Friday, breaking a critical bullish trendline.
The stock’s 20 month moving average sits just above $400 a share. This puts Super Micro Computer incorporated shares in an intermediate term bear market trend and a long-term bull market trend.
As a result, the outlook for SMCI shares is neutral with a target of $500 by year-end.
I issued a warning about Airbnb last week, ahead of today's dismal performance. Take a minute to read it here, because the story hasn't changed.
Shares of Airbnb (ABNB) are trading 15% lower for the day following the company's earnings report on Tuesday night.
In May, Airbnb's management lowered their earnings guidance for this quarter, expecting that they would see some pressure on their business model. Actual results for the quarter came in lower than those lowered expectations to miss on an earnings per share basis by $0.05. Actual earnings for the quarter were $0.86 against expectations of $0.91.
Airbnb's revenue was higher than expectations and showed growth of 10% on a year over year basis. That revenue growth is down 8% compared to last quarter’s growth.
Investors have become increasingly concerned about the travel industry. Airline, hotel, resort and Airbnb Our trading significantly lower over the last two months. The selling pressure is based off growing concern over a recession and the strength of consumers.
Airbnb shares are now trading at their 52-week low as the stock is trading just above $110 at Wednesday’s close.
Early in the week I noted that the stock had broken below its 20-month moving average, putting Airbnb in a long-term bear market trend.
Investors should expect that trend to continue until the stock sees Round Number Psychological support at the $100 level. That price is 10% below today's close.
The outlook for Airbnb remains bearish with a price target of $80 if the stock breaks through $100.
Shopify (SHOP) stock served as one of the bright lights in the market today as the stock moved higher by 20%.
The stock moved higher after the company's better than expected earnings report that hit the wires this morning. Earnings per share or 6% better than analysts’ expectations driven by stronger than expected revenue.
For the quarter, Shopify's revenue grew by 20% compared to 23% last quarter. Shopify's management guided earnings revenue growth for next quarter to the mid to low 20% range, which kept investors happy.
The company’s positive results are being taken as a sign that online shoppers remain active, despite signs that the economy may be heading for a downtick.
Today's rally put Shopify shares back above their 50-day moving average, a trend line that they closed below just recently, the end of July. That 50-day moving average has been transitioning into a bullish trend.
Historically, A stock has a two out of three chance that the price will close higher each day that the 50-day moving average is in a bullish trend.
The last time that Shopify's fifty day moving average turned bullish was November 2023. The stock embarked on a 50% rally over four months.
Investors should be cautious as the broader market weakness may Provide a headwind for Shopify. That said, a move above $67.50 should target another round of buying with a target of $75.
