Earnings season kicks off for the Magnificent Seven tech giants that have dominated stock market activity, with Tesla (TSLA) set to report results after the closing bell, and investors are closely watching to see if robotaxis or a cheaper car model will mark the electric vehicle maker’s future growth; General Motors (GM) shares are rising after an earnings beat and guidance lift; PepsiCo (PEP) posts an earnings beat despite a Quaker Foods recall; Apple’s (AAPL) China iPhone sales plunge 19% in the first quarter; and the U.S. Federal Trade Commission (FTC) files a lawsuit to prevent luxury giant Tapestry (TPR) from buying rival Capri Holdings (CPRI) in an $8.5 billion deal, citing worries about a decline in competition in the “accessible luxury” handbags market. U.S. stock futures are rising, while gold prices are falling and trading around $2,310 an ounce as fears of a broader Middle East conflict ebb and investors turn their focus to earnings. Here’s what investors need to know today.
1. Tesla Expected to Report Q1 Declines; Road Ahead for EV Maker in Focus
Tesla (TSLA) is set to post first-quarter results after the closing bell that are expected to show falling revenue amid declines in deliveries. Investors will be largely focused on where the company sees itself going as it embarks on price cuts across the globe to compete with Chinese rivals. Analysts project declines on all fronts, with Tesla’s revenue expected at $22.34 billion for the first quarter of 2024, adjusted net income at $1.91 billion, and adjusted earnings per share (EPS) at 52 cents. Tesla shares are were up slightly in premarket trading.
2. GM Shares Surge as Results Beat Forecasts, Posts FY Guidance Hike
Shares of General Motors (GM) were up more than 4% in premarket trading after the car maker posted first-quarter results that blew past top- and bottom-line expectations and announced an increase in its 2024 profit guidance. The Detroit automaker now expects 2024 adjusted earnings of $9 to $10 a share, up from a previous range of between $8.50 and $9.50 a share. For the quarter, the company posted adjusted EPS of $2.62, versus $2.21 a year earlier, while revenue increased 7.6% to $43.01 billion. The company also posted a loss in China, once a key profit center.
3. PepsiCo Posts Earnings Beat Despite Quaker Foods Recall
PepsiCo (PEP) reported better-than-expected first-quarter profit, despite a recall of products at Quaker Foods in the U.S. during the period. Earnings per share (EPS) were an adjusted $1.61 compared with the expected $1.52 each, while revenue of $18.25 billion beat forecasts of $18.07 billion. “During the first quarter, our businesses remained agile and performed well, with a strong performance from our International business,” Chief Executive Officer (CEO) Ramon Laguarta said. PepsiCo affirmed previous 2024 guidance, expecting at least a 4% increase in organic revenue and at least an 8% percent rise in core constant currency EPS. PepsiCo shares were down slightly in premarket trading.
4. Apple’s China iPhone Sales Plunge 19% in First Quarter, Huawei Catches Up
Apple’s (AAPL) sales of iPhones in China, its biggest overseas market, fell by 19% year-over-year during the March quarter, according to market research firm Counterpoint. The U.S. company’s market share fell to third from first in China, around the same level as rival Huawei Technologies, while the overall market expanded by 1.5%. Apple, which reports fiscal second-quarter results in early May, has been struggling in China amid a ban on foreign devices in state-backed firms, as well as Huawei’s release of a phone with the latest microchip despite U.S. sanctions on access to advanced chips. Apple’s China woes and lack of AI capabilities have been a drag on its stock this year, although analysts are generally bullish on the company, noting pent-up iPhone demand, growth in revenue in its App store, and expected AI announcements in June. Apple shares, which are down about 14% this year, were down slightly in premarket trading.
5. FTC Sues to Block Tapestry’s $8.5B Purchase of Capri
The U.S. Federal Trade Commission (FTC) filed a lawsuit Monday to prevent luxury giant Tapestry (TPR) from buying rival Capri Holdings (CPRI) in an $8.5 billion deal they agreed to last August. The FTC said the deal combining Capri, which owns Versace and Michael Kors, and Coach and Kate Spade parent Tapestry would “eliminate direct head-to-head competition” between the brands, especially in the market for “accessible luxury” handbags. The FTC also said the combination of the two companies, which would employ roughly 33,000 employees worldwide, could “could negatively affect employees’ wages and workplace benefits.” The proposed merger was aimed at creating a U.S. competitor to the European giants that dominate luxury, such as France’s LVMH Moët Hennessy Louis Vuitton. Capri and Tapestry released statements disagreeing with the FTC’s move and said they would defend their case in court. Shares of both companies were down slightly in premarket trading.
