We have made our way through the bulk of earnings season and our two biggest takeaways so far are:
1. Investors don't "like" social media stocks
2. All eyes are on guidance
To address the first point, social media stocks have been annihilated this season after Twitter (TWTR), Yelp (YELP) and LinkedIn (LNKD) all lost more than a quarter of their value after reporting their first quarter results. These stocks were hit hard after all three companies, in this once hot space, reported lackluster numbers and lowered guidance for the second quarter and the rest of 2015. That raises the question: If these companies aren't bullish about their future -- why should investors be?
Which brings us to our second point -- all eyes are on guidance. As more and more companies released their numbers, it became clear to us that, this season, the biggest casualties came from companies who lowered their guidance. Keurig Green Mountain (GMCR) was just the latest shoe to drop after the company lowered guidance.
History shows us that some of the market's biggest winners can be found from stocks that gap up after reporting earnings. Conversely, some of the biggest losers occur from stocks that gap down after reporting numbers. That's why we spend a lot of time analyzing what happens during earnings season for our advisory and research clients. In addition to doing our homework (to borrow a term from Jim Cramer) and analyzing the actual numbers, we also look at how stocks react to the numbers. Here is a quick glimpse at some of today's winners and losers as we make our way through earnings season.
Today's Winners: HubSpot (HUBS), Alibaba Group (BABA), Norwegian Cruise Line Holdings (NCLH).
Today's Losers: Whole Foods Market (WFM), Keurig Green Mountain (GMCR), Kate Spade (KATE).
If history is any guide, we should expect winners to rally from here and the losers to continue to fall (barring some unforeseen event in either direction).