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Market Rally Pauses, Tesla Jumps, Moderna Pops Late; What Investors Need Now
Dow Jones futures fell slightly after hours, along with S&P 500 futures and Nasdaq futures. United Airlines headlined overnight earnings, while Moderna stock rose on RSV vaccine trial data. Microsoft job cuts and a Bank of Japan policy shift could come Wednesday.
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The stock market rally had a relatively quiet session, despite a solid drop for the Dow Jones.
Tesla (TSLA) continued its rebound from bear-market lows, jumping 7.4% to 131.49. Shares moved slightly above the 21-day line, but remain well below the 50-day and especially the 200-day line. Tesla China EV registrations bounced in the latest week following recent big price cuts there. But it may be some time before investors get a clear picture of the impact of Tesla’s global price cuts and demand. Tesla earnings for Q4 are due on Jan. 25.
A pause for a few days would let more stocks set up. That includes stocks that rallied from early entries and could use handles.
Chevron (CVX), Vertex Pharmaceuticals (VRTX) and TJX Cos. (TJX) are three stocks that are actionable now.
But overall, investors should be patient.
Key Earnings
United Airlines (UAL) and Interactive Brokers (IBKR) reported Tuesday night.
United Airlines earnings comfortably beat Q4 views while the carrier also gave bullish guidance. UAL stock ascended modestly after hours. Shares dipped 0.9% to 51.20 on Tuesday, but after running sharply higher over eight sessions.
Interactive Brokers earnings topped views as well. IBKR stock rose slightly in overnight action. Shares slipped 2 cents to 77.19 on Tuesday, working on an 80.95 buy point from a double-bottom base. Friday’s move over the 50-day line offered an early entry, but just before earnings.
Charles Schwab (SCHW) and trucking firm J.B. Hunt Transport Services (JBHT) are due early Wednesday. SCHW stock inched up 0.6% to 83.49 on Tuesday, holding in a buy zone. JBHT stock dipped 0.3% to 176.29, between the 50-day and 200-day lines.
UAL stock is on the IBD 50. VRTX stock is on the IBD Big Cap 20.
Moderna RSV Vaccine
Moderna late Tuesday reported strong results for respiratory syncytial virus, or RSV, vaccine. The biotech’s RSV vaccine uses its mRNA technology. MRNA stock rose solidly in extended trading, signaling a strong bounce from around the 10-week line. The Moderna RSV vaccine follows positive RSV results from Pfizer (PFE) and GlaxoSmithKline (GSK).
Microsoft Job Cuts Loom
Meanwhile, Microsoft (MSFT) may announce new job cuts as soon as Wednesday, Bloomberg reported, citing sources. The cuts could be “significantly higher” than in prior layoffs. Sky News reported that the Dow Jones software giant could cut up to 5% of staff, which would be 11,000 jobs. In October, Microsoft cut about 1,000 positions.
MSFT stock rose 0.5% to 240.35 on Tuesday, its seventh straight advance and just below its 50-day line. Microsoft earnings are due Jan. 24.
The video embedded in the article reviewed CVX stock, Eli Lilly (LLY) and MercadoLibre (MELI).
Dow Jones Futures Today
Dow Jones futures fell 0.2% vs. fair value. S&P 500 futures dipped 0.25% and Nasdaq 100 futures declined 0.3%.
Crude oil prices rose slightly.
The Bank of Japan could signal the end of its long-term policy of keeping official rates and Japanese sovereign debt near 0%. In December, the BoJ effectively hiked, by letting the 10-year Japanese yield rise to 0.5%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally had a mixed session Tuesday, generally showing modest intraday swings.
The Dow Jones Industrial Average slumped 1.1% in Tuesday’s stock market trading, but that was largely due to Goldman Sachs (GS) and Travelers (TRV) weighing on blue chips. The S&P 500 index dipped 0.2%, with Tesla stock and Morgan Stanley (MS) the top performers. The Nasdaq composite advanced 0.1%. The small-cap Russell 2000 edged down 0.1%.
U.S. crude oil prices edged up 0.4% to $80.18 a barrel, closing above $80 for the first time in two weeks. Crude futures hit $81.23 intraday.
The 10-year Treasury yield rose 2 basis points to 3.53%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) dipped 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.3%, with Microsoft stock a major holding. The VanEck Vectors Semiconductor ETF (SMH) climbed 0.6%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) popped 2.9% and ARK Genomics ETF (ARKG) 1.8%, both extending gains from the 50-day line and moving toward their 200-day averages. TSLA stock remains a top holding across Ark Invest’s ETFs, with Cathie Wood adding a lot more shares in recent weeks.
SPDR S&P Metals & Mining ETF (XME) fell 1%. U.S. Global Jets ETF (JETS) edged up 0.4%, with UAL stock a big holding. SPDR S&P Homebuilders ETF (XHB) declined 0.8%. The Energy Select SPDR ETF (XLE) tilted up 0.2%, with CVX stock a major holding. The Financial Select SPDR ETF (XLF) retreated 0.7%. The Health Care Select Sector SPDR Fund (XLV) slipped 0.5%.
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Stocks In Buy Zones
Chevron climbed advanced 1.65% to 180.49, moving above the 50-day line and a short-term high of 180.23. CVX stock has a 189.78 flat-base buy point, according to MarketSmith analysis.
VRTX stock popped 3.7% to 311.58, rebounding above the 50-day line in above-average trade. That offers an early entry for Vertex, which has a 324.85 flat-base buy point. VRTX stock also has retaken a prior buy point of 306.05. The biotech hit a record 324.75 on Dec. 8, but then tumbled to the 200-day line by year-end. Vertex stock rebounded from there last week. Investors could wait to see if shares pause around the 50-day line.
TJX stock closed up 2 cents to 81.55, rebounding intraday from a test of an 81.29 flat-base buy point cleared on Jan. 6. Since then shares have been consolidating in the buy zone. The 5%-deep flat base is just above a long, 31%-deep cup consolidation.
Market Rally Analysis
The stock market rally had a relatively quiet session after last week’s big gains.
The S&P 500 briefly retook the 4,000 level and pulled back, but only holding above the 200-day.
The Russell 2000, which ran past its 50-day and 200-day lines last week, backed off after coming within 1% of its November highs.
The Nasdaq composite is holding above its 50-day line, with the December highs and 200-day line the big resistance areas on the horizon. A lot of Tuesday’s strength came from Tesla, chips and beaten-down cloud software names.
The Dow Jones fell solidly, largely on GS stock and Travelers. The blue-chip index is comfortably above its moving averages, with only its December highs to watch.
The market rally still looks healthy. A number of trends, including the Nasdaq advance-decline line and new highs vs. lows, have improved in the past several sessions.
A pause or modest pullback here would be normal or even healthy. The S&P 500 decisively breaking below the 200-day line, perhaps undercutting the 50-day, would be more worrisome. On the upside, the late 2022 highs are the next key level.
While Chevron, TJX and Vertex and a few other names are arguably actionable, there’s not a lot to buy right now. A few stocks that looked promising Tuesday morning, such as Monster Beverage (MNST), wilted by the close.
Many stocks already moved up over the past several sessions, such as Medpace (MEDP) and MercadoLibre. A pause would let many of these names form handles or shelves. Meanwhile, other stocks are coming into the picture.
Time The Market With IBD’s ETF Market Strategy
What To Do Now
Patience is important. With the market ready possibly pausing and not many stocks flashing buy signals, resist the temptation to buy extended stocks. If this uptrend works, you’ll have safer opportunities ahead. That include recently hot stocks if the form handles or touch support levels.
Definitely run your screens of leading stocks to find those that are showing promising action.
If the market offers more stocks flashing buying signals, you can exposure gradually over time. In addition to a variety of economic and Fed crosscurrents, earnings season is underway, with the upcoming two weeks likely the heaviest releases.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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2023 Corvette Z06 Pops Engine After Only 52 Miles, Owner Documents Saga on Video
As exciting as the wider bodywork and refined aerodynamics of the new Chevrolet Corvette Z06 are, the 5.5-liter flat-plane LT6 V-8 engine sitting behind the driver is the star of the show. Unfortunately for new Z06 owner Marco Garcia, the motorsport-derived engine in his Corvette Z06 failed after traveling just 52 miles on the initial delivery drive.
Garcia purchased the black-over-red Corvette Z06 1LZ on December 23 from Covina Hills Chevrolet in Covina, California, according to his YouTube videos. The in-demand sports car carried a sticker price of $113,975, but documentation fees and dealer charges saw the final sales price reach $182,457.38. Garcia has owned two Stingrays at this point, and even arrived to purchase the Z06 in his modified C8. With the purchase process complete, one of the salesmen at the dealer offered to follow Garcia back to his construction yard with said Stingray. Garcia would take them up on this offer, and agreed to drop the salesman back at the dealer following the exchange.
After dropping the Stingray at the yard, the salesman jumped into the Z06 for the relatively short trek back to the dealership. Garcia noted in his follow-up video that the two enjoyed a few gentle pulls on the ride, but didn’t push the car too hard. Garcia further noted that he is already quite familiar with the break-in procedure for the C8 platform due to his previous ownership experiences. Shortly after returning the salesman to the dealership, things went horribly wrong.
Garcia noticed a lack of power coming from the engine and opted to pull off the highway to investigate. A check engine light and some aggressive rattling noises accompanied the issue, which began with just 52 miles on the odometer, Garcia says. After walking into town to charge his phone, Garcia was told by the dealer that he couldn’t tow the car back there that evening. Furthermore, OnStar struggled to help as they didn’t have the proper warranty information yet for such a new car. Garcia was forced to tow the Z06 back to his construction yard that night.
Things didn’t improve much the following day. OnStar sent a tow truck for the car on the 24th, but that truck wasn’t authorized to return the car to the selling dealer. That created a new issue, apparently requiring Garcia to spend hours going through the OnStar service for assistance yet again. Once the car actually arrived at the proper dealership, a ton of error codes began popping up in Garcia’s email inbox, sent via OnStar services. The most notable of these issues was listed as an engine and transmission system error, which you’d expect based on the audio found in the clip alone.
Garcia says he’s had it with the situation, and that he is not interested in continuing his Z06 ownership experience. Once the car is repaired, he’s planning to move it on to the next owner.
“Dead Z06 for sale pretty soon,” said Garcia in the follow-up post. “I guess I’ll probably try and fix it and sell it to someone else. It’s a shame.”
Since the moment the Z06 debuted, General Motors has been adamant that the LT6 V-8 is a bombproof engine. The LT6.R V-8 has been utilized by the Corvette Racing C8.R for a few years at this point, with the street motor featuring an almost identical top-end design. That said, large displacement flat-plane V-8s are known to be tricky, as was previously highlighted by Ford’s Voodoo V-8 and its vibration concerns.
A GM spokesperson confirmed to R&T that the company is aware of the incident involving this Z06 and is actively looking into the situation. As is common practice with this kind of failure, GM will likely tear down this motor to figure out what went wrong with this specific example.
Hopefully this particular LT6 was just a bad egg. As of right now, this problematic example appears to just be a small drop in the bucket as owners continue to take their new Z06s home.
© Chevrolet
2023 corvette z06 lt6
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Tesla used car price bubble pops, weighs on new car demand
SAN FRANCISCO, Dec 27 (Reuters) – Tesla buyers who waited months for their new car have had an unusual choice for much of the past two years: keep the new electric vehicle, or sell it at a profit to someone with less patience.
But the days of the Tesla flip are numbered – a potential threat to new car prices that are already getting cut.
Prices of used Teslas are falling faster than those of other carmakers and the clean-energy status symbols are languishing in dealer lots longer, industry data provided to Reuters showed.
The average price for a used Tesla in November was $55,754, down 17% from a July peak of $67,297. The overall used car market posted a 4% drop during that period, according to Edmunds data. The used Teslas were in dealer inventory for 50 days on average in November, compared with 38 days for all used cars.
Rising gasoline prices, an effect of the Ukraine war, boosted demand for Teslas, one of few long-range electric vehicles in the market. Tesla Inc (TSLA.O) itself raised prices faster than prices for other cars, building its profit margins. And buyers of some new Teslas took advantage of the booming market to sell their relatively new cars for a profit, then order new ones, driving demand for Tesla’s new cars.
Now fuel prices are easing, interest rates are rising, Tesla output is increasing, and EV competition is growing, leading used Tesla prices to fall faster than the market, and creating a cascading effect on prices of new Teslas.
Tesla last week doubled a U.S. new-car price cut to $7,500 for Model Ys and Model 3s delivered this year, adding to investor jitters about softening demand.
Nearly a third of used Teslas for sale in August were 2022 models up for resale, a sign that original buyers were aiming to flip, analysts said. That compares with about 5% of other brands on the used market, research firm Edmunds said.
“You can’t sell your current Tesla for more money than you paid for it, which was true for a lot of the past two years,” said Karl Brauer, executive analyst at car sales website iSeeCars.com. “That would reduce demand for new Teslas.”
On Thursday Musk said that the “radical interest rate changes” have increased the prices of all cars, new and used, and that Tesla potentially could lower pricing to sustain volume growth, which would result in lower profit.
Tesla, which has disbanded its media relations department, did not respond to Reuters’ emailed questions.
Indeed, Tesla is hardly alone: the U.S. used car market thrived as global vehicle manufacturing hit snags, but it now is facing a “used vehicle recession,” one analyst said, after used car seller CarMax last week reported an 86% drop in third-quarter profit.
But Tesla is leading the retreat: the factors that pushed up prices of its vehicles were exaggerated compared with other brands because Teslas were “basically for a long time really the only viable product when it came to used EVs,” said Ivan Drury, director of Insights at Edmunds.com.
EVs such as the Ford F-150 Lightning and the Hyundai Ioniq 5 are coming to market with a lot of buzz, said Liz Najman, content marketing manager at EV researcher Recurrent.
Software engineer Greg Profitt bought a new Model Y last year for $49,000 and sold it three months later for $12,000 more. He ordered a new one – but has just bought a used Tesla at a discount.
“The economy kind of scares me to buy new ” he said, adding that the new $7,500 discount would be too little to sustain demand.
Reporting by Hyunjoo Jin in San Francisco and Nivedita Balu in Bengaluru
Editing by Peter Henderson, Anna Driver and Matthew Lewis
Our Standards: The Thomson Reuters Trust Principles.
Mobileye pops more than 30% in IPO after spinning out of Intel
Amnon Shashua, president and chief executive officer of Mobileye Global Inc., and Patrick Gelsinger, chief executive officer of Intel Corp., outside the Nasdaq MarketSite during the company’s IPO in New York, US, on Wednesday, Oct. 26, 2022.
Michael Nagle | Bloomberg | Getty Images
Mobileye shares popped more than 30% in their stock market debut on Wednesday after the maker of technology for self-driving cars was spun out of Intel.
In a year that’s seen no significant tech IPOs in the U.S., Mobileye offers investors an opportunity to get in on area of growth. But it’s not a new name for the market.
Mobileye was publicly traded before Intel bought the Israeli company in 2017 for $15.3 billion. At its IPO price of $21, Mobileye was valued at just $17 billion, resulting in minimal gains for Intel thus far. The stock, trading under the ticker MBLY, rose to $27.85 on Wednesday.
Intel will retain control of Mobileye and hold over 750 million shares of Class B stock, which has 10 times the voting power of Class A stock. The company said in an Oct. 18 filing that it expected the offering to be priced between $18 and $20 per share.
The IPO raised $861 million, and the move to list Mobileye on the Nasdaq is part of Intel’s broader strategy to turn around its core semiconductor business, which has lagged behind rivals like AMD and Nvidia in recent years. Intel said it would use some funds from the Mobileye listing to build more chip factories as it embarks on a capital-intensive process to become a foundry for other chipmakers.
However, Mobileye’s market cap is far below Intel’s earlier expectations, the latest sign that tech investors have cooled on IPOs and have readjusted their valuations from the frothy days of the past half-decade as interest rates rise and the economy slows.
Founded in 1999, Mobileye has partnered with Audi, BMW, Volkswagen, GM, and Ford to develop advanced driving and safety features such as driver assist and lane-keeping using the company’s “EyeQ” camera, chips, and software. Mobileye CEO Amnon Shashua said in the IPO filing that 50 companies are currently using the company’s technology across 800 vehicle models.
Revenue in the second quarter jumped 41% to $460 million. Net loss narrowed to $7 million from $21 million.
Class A stock is what investors will buy in the IPO, and Intel expected there to be 46.26 million Class A shares outstanding, with the potential for more if the underwriters decide to exercise their option to purchase additional shares.
Intel shares were down slightly on Wednesday and have lost about 47% of their value this year, while the Nasdaq is down 29%.
— CNBC’s Kif Leswing contributed to this report.
WATCH: Intel plans to cut thousands of jobs amid PC slowdown
Zscaler Stock Pops As Zscaler Earnings Top Estimates On Cloud Cybersecurity Growth
Zscaler (ZS) soared Friday after the company reported fiscal fourth-quarter earnings, revenue and billings that handily beat Wall Street targets. And the company’s fiscal 2023 outlook for Zscaler stock came in above views.
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ZS stock catapulted 21.9% to close at 188 on the stock market today. The cybersecurity firm reported July quarter earnings after the market close on Thursday.
“Zscaler was the last (cybersecurity) company to report results this earnings cycle, and clearly stood out as having the best results and the strongest guidance,” said Wells Fargo analyst Andrew Nowinski in a report.
He added: “The strong performance was largely a function of the fact that the company was purpose-built for exactly this type of macro environment, where budgets are tightening and companies are looking for ways to lower costs. Zscaler can eliminate many point products and simplify the cyber infrastructure, all while lowering costs for the customer.”
ZS Stock: Earnings, Revenue Beat Views
Prior to the Zscaler earnings release, the cybersecurity stock had retreated 54% in 2022.
The San Jose, Calif-based firm said earnings were 25 cents a share on an adjusted basis, up 78% from 14 cents a year earlier. In the July quarter, revenue rose 61% to $318.1 million, the company said.
Analysts expected Zscaler earnings of 21 cents per share on sales of $305.4 million. Also, billings rose 57% to $520.4 million, compared with estimates for $467.2 million.
For fiscal 2023, which starts with the October quarter, Zscaler said it expects earnings of $1.17 a share at the midpoint of its outlook, ahead of estimates for $1.04 a share.
Zscaler said it expects revenue in a range of $1.49 billion to $1.50 billion. Analysts had predicted revenue of $1.468 billion.
Zscaler Stock: Billings Forecast Tops Estimates
The company forecast fiscal 2023 billings of $1.93 billion, compared with estimates of $1.859 billion.
“Despite the uncertain macroeconomic landscape which continues to evolve, we continue to see favorable demand for our Zero Trust Exchange platform because it makes businesses more secure, simplifies IT, and reduces cost,” Chief Executive Jay Chaudhry said in the company’s earnings release.
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Heading into the Zscaler earnings report, the company owned a Relative Strength Rating of 17 out of a best-possible 99, according to IBD Stock Checkup.
In addition, Zscaler provides cloud-based cybersecurity services via 150 data centers worldwide
Zscaler’s web security gateways inspect customers’ data traffic for malware. The Zscaler Private Access, or ZPA cloud service, replaces virtual private networks, or VPNs, to support remote work.
If you’re new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns for issues such as Zscaler stock is one key to the investment guidelines.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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Dow Jones Jumps; Tesla Surges As Elon Musk Eyes This Move; Warren Buffett Stock Pops
The Dow Jones Industrial Average charged higher as the stock market ended a three-week losing streak. Tesla (TSLA) jumped as Elon Musk eyes a new facility. Warren Buffett stock RH (RH) surged on results. Apple (AAPL) closed in on a key benchmark.
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A number of stocks passed buy points. Palo Alto Networks (PANW) passed an early entry while Archer-Daniels-Midland (ADM) and Burger King parent Restaurant Brands (QSR) attempted breakouts.
Volume was mixed, running higher on the Nasdaq but slipping on the New York Stock Exchange according to early data.
The yield on the benchmark 10-year Treasury note edged three basis points higher to 3.32%. West Texas Intermediate crude oil rose nearly 3% to more than $86 per barrel.
Positive signs for the economy helped the market shake off hawkish noises from some senior Federal Reserve officials, according to Oanda senior market analyst Edward Moya.
“Economists are slightly lowering their inflation forecasts and that could mean the Fed won’t have to take rates above 4%,” he said in a note to clients. “Another round of hawkish speak from both the Fed’s Bullard and Waller was not able to derail today’s stock market rally.”
Nasdaq Leads As Small Caps Shine
The Nasdaq fared best out of the major indexes as it rose 2.1%. Cybersecurity stock Zscaler (ZS) was a top performer here, rocketing nearly 22% on earnings.
The S&P 500 also muscled higher, popping 1.5% and rising back above its 50-day line. Dish Network (DISH) impressed here as it rose 8.6%.
The S&P 500 sectors were all positive, with communication services, technology and energy the best gainers. The defensive utilities area lagged.
Small caps shined, with the Russell 2000 up ending the session up 2%.
The Innovator IBD 50 ETF (FFTY), a bellwether for growth stocks, also impressed, rising 1.9%.
Dow Jones Today: Apple Stock Gains As Salesforce Leads
The Dow Jones industrials lagged the other major indexes but still rose almost 400 points, or 1.2%.
Key component Apple stock is closing in on the key 50-day moving average after gaining 1.9%. It remains well shy of a handle entry of 176.25.
Earlier this week, the company announced its iPhone 14 smartphone family at a media event titled “Far Out.”
But it was Salesforce (CRM) that was the star of the Dow Jones today as it rose 3.6%. Caterpillar (CAT) also impressed as it gained 3.5%.
Tesla Stock Gains As Elon Musk Eyes Move
Tesla stock got a boost on the news it is considering building a lithium processing facility in Texas. The electric-vehicle giant, which is led by Elon Musk, is looking into a facility to refine lithium hydroxide on the Gulf Coast of Texas.
If the project is approved, Tesla says it could start construction by the fourth quarter, with commercial production beginning by the end of 2024.
Tesla stock has formed a consolidation with a 402.73 buy point, according to MarketSmith analysis. It remains a long way from its entry but popped 3.6% for the day.
Adventurous investors may choose to use the retaking of the 200-day line Friday as an entry, though this would be a very aggressive move.
Elon Musk also revealed in a tweet that he has had some “promising conversations” with iPhone giant Apple about using SpaceX’s Starlink system for connectivity.
Why The Market Rally Is Stronger Than It Looks
Warren Buffett Stocks Pops On Earnings
RH, formerly known as Restoration Hardware, jumped following its latest earnings report. It ended the session up 4.4%.
Warren Buffett is a fan of the home furnishings retailer, with his firm Berkshire Hathaway (BRKB) currently holding more than 2 million shares.
The legendary investor has reason to smile after RH posted an earnings report that surpassed Wall Street expectations. EPS of $8.08 came in well above analyst views, while revenue of $992 million also beat.
It wasn’t all good news though, as the firm said it expects Q3 net revenue to be down 15% to 18%. The firm’s CEO, Gary Friedman, said that the economy is now in a recession.
“Anybody who thinks we’re not in a recession is crazy,” Friedman said during the conference call.
Outside Dow Jones: New Leader Passes Entry
With the market rally gaining steam once more, now is a time to be looking for actionable stocks.
Palo Alto Networks popped above a trendline entry near 560. It is also eyeing a higher cup-with-handle buy point of 578.89.
The stock won promotion to the IBD Leaderboard list of top stocks following its bullish move. It rallied in sympathy with rival Zscaler (ZS).
Food processing giant Archer-Daniels-Midland broke past a cup-with-handle entry of 91.54, though it closed just below the entry. This is a third-stage base, which means gains from the next breakout could be limited.
The relative strength line has been moving higher even as the stock formed its handle, a bullish sign. The stock is in the top 6% of stocks in terms of price performance over the past 12 months, while earnings growth has also been strong. Analysts see profits ballooning by 31% in 2022, according to MarketSmith data.
Burger King parent Restaurant Brands tested a cup-with-handle buy point of 61.19, coming within a few pennies of passing the entry. It closed within touching distance, so is one to watch.
The restaurant chain is in the top 11% of stocks in terms of price performance over the past 12 months. It holds a strong Composite Rating of 95.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
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DOCU Stock Pops as DocuSign Earnings Fall But Top Estimates Amid Lowered Expectations
DocuSign (DOCU) reported July-quarter earnings and revenue that topped estimates amid lowered expectations. The company’s outlook came in mixed, but DOCU stock surged on the news Friday.
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The San Francisco-based software maker reported earnings after the market close on Thursday. DocuSign earnings for its fiscal second quarter came in at 44 cents a share, down 6% from a year earlier, but ahead of estimates for 42 cents.
In addition, the maker of electronic signature software said revenue rose 22% to $622.2 million. Analysts had predicted revenue of $602 million. A year earlier, DocuSign earnings were 47 cents a share on sales of $512 million.
Billings, a sales growth metric, rose 9% to $647.7 million vs. estimates of $601.8 million.
DOCU stock popped 10.5% to close at 64.04 on the stock market today.
DOCU Stock: More In-Person Meetings Hit Business
For the current quarter ending in October, DocuSign forecast revenue of $626 million at the midpoint of its outlook and billings of $589 million. Analysts had predicted third-quarter revenue of $625 million and billings of $593.4 million.
Demand for DocuSign products surged during the early part of the coronavirus outbreak, but many businesses are resuming in-person meetings. In addition to accommodating electronic signatures, the company’s software also automates the filing of contracts over the internet.
DocuSign has a search underway for a new chief executive. Board Chair Mary Wilderotter was named interim CEO on June 21.
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“We thought the quarter/guide were better-than-feared but we came away less confident in a timely turnaround to healthy growth and remain in wait-and-see mode until a new CEO,” said RBC Capital analyst Rishi Jaluria in a report. “DocuSign noted the company is close to naming a new CEO, suggesting M&A is off the table for now.”
Thus far in 2022, DOCU stock had retreated 63% heading into the earnings report. DocuSign holds a Relative Strength Rating of only 5 out of a best-possible 99, according to IBD Stock Checkup.
If you’re new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns for issues such as DOCU stock is one key to the investment guidelines.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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