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Meta, IBM & Tesla: Tech Stocks Move in Different Directions

Plus500 | Thursday 25 April 2024

This week, traders, especially those focused on technology stocks, gained access to valuable insights into the market's leading tech companies as earnings reports from Meta, IBM, and Tesla sparked notable volatility and unveiled some surprises. 

Here's what you need to know about the latest updates in the tech stock market:

Tech earnings charts

Tesla Gains Despite Weak Earnings 

Despite having endured numerous losses since the start of the year, dropping by approximately 41.6%, Tesla (TSLA) regained some ground on Wednesday, April 24, even after Tuesday’s weak earnings report. 

On Tuesday, April 23, the electric vehicle (EV) giant reported its Q1 results, whereby it was revealed that the company made “significantly less money” that quarter as profit declined by 55% compared to the same period a year earlier. In addition, Q1 sales deteriorated by 8.5% compared to the year before period and layoffs of about 14,000 materialised. The company also embarked upon price cuts in order to strengthen sales. However, even with all of its attempts, Tesla seems to have had a hard time gaining buyers’ traction. 

Accordingly, all of these gloomy revelations and weak figures only reinforced investors’ and traders’ apprehensions about the future of this giant. Moreover, many attributed Tesla’s woes to increasing competition in the world’s second-largest economy- China, where automaker companies keep emerging. (Source: The New York Times)

So Why Did Tesla Soar the Day After Its Dreary Earnings?

It seems that the less-than-rosy results did not deter traders on Wednesday and it may be due to the fact that Tesla announced some potentially promising plans for a cheaper model that is set to go into production in H2 2025. 

In addition, CEO Elon Musk revealed plans to advance Artificial Intelligence (AI) and driverless cars stating that Tesla “should be thought of as an AI-robotics company,” and not just an automaker. He also stated that EV sales will be boosted in 2024. 

Nonetheless, it is important to note that these are all predictions and that, according to some, “Musk and Tesla have a history of not living up to timelines on vehicle launches.” Therefore, only time will tell what lies ahead.

Meta’s $200 Billion Losses

Social media and tech giant Meta (META) fell by 19% on Wednesday, hence losing a whopping $200 billion in market capitalisation. However, unlike Tesla which reported lower earnings yet soared on Wednesday, April 24, Meta reported better-than-expected Q1 revenue and profit, gained about 40% this year, and yet its stock traded notably lower that day.

Interestingly, whereas CEO Mark Zuckerberg focused on Meta’s AI and Metaverse products in the earnings call (like the Meta Llama 3 LLM and Meta AI, the counterpart of OpenAI’s ChatGPT), he also listed “the many ways Meta loses money.” This, in turn, may have caused many investors and traders to shy away from Meta’s stock that day. 

On the other hand, Zuckerberg also revealed that he expects a “multiyear investment cycle” before Meta’s AI products show their real success. The earnings also revealed that Meta’s Reality Labs segment (which includes Metaverse technology software and hardware development) lost about $3.85 billion. How the company will fare in the months to come is yet to be determined.

IBM’s Earnings Beat & Billion Dollars Acquisition of HashiCorp

American information technology company IBM (IBM) traded 9% lower on Wednesday despite having reported better-than-expected Q1 earnings. This is because whereas the company’s EPS came in above analysts’ expectations at $1.68 VS. the predicted $1.60, its revenue came in lower at $14.46 billion vs. the expected $14.55 billion.

IBM revealed that it would acquire cloud computing company HashiCorp for $6.4 billion by the end of 2024. The deal, according to IBM CEO Arvind Krishna could boost the company’s clientele. 

However, the actual ramifications of this impending purchase are still unclear. Traders and investors alike will have to wait and see.

Conclusion

The market moved in different directions on Wednesday as tech giants Tesla, Meta, and IBM revealed valuable information about their performance and the health of their financials. 

To understand the economy and the overall market better, traders, investors, and analysts may want to keep tabs on any news or updates from other companies.


This information is written by Plus500 Ltd. The information is provided for general purposes only, and does not take into account any personal circumstances or objectives. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. No representation or warranty is given as to the accuracy or completeness of this information. It does not constitute financial, investment or other advice on which you can rely. Any references to past performance, historical returns, future projections, and statistical forecasts are no guarantee of future returns or future performance. Plus500 will not be held responsible for any use that may be made of this information and for any consequences that may result from such use. Hence, any person acting based on this information does so at their own discretion. The information has not been prepared in accordance with legal requirements designed to promote the independence of investment research.

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