Like Me ($FB)

Facebook (FB) is set to report Q2 results tonight after the close with a conference call to follow at 5pm ET. 

Current Capital IQ consensus stands at EPS of $0.82 on Revenue of $6.00 bln.

• Revenue Growth- Q1 revenue growth was 51.8%; Q4 saw revenue accelerate to 52% compared to 40% in Q3 and 39% in Q2.
• Advertising Revenue- Q1 increased 57% y/y to $5.2 bln; Q4 came in at $5.637 bln which was also up 57% y/y.
  • Mobile Advertising Revenue- Mobile advertising revenue represented approximately 82% of revenue in Q1 compared to 80% in Q4. This is expected to see a small uptick.

Q1 Recap

• FB reported Q1 (Mar) earnings of $0.77 per share, $0.15 better than the Capital IQ Consensus of $0.62; revenues rose 51.8% year/year to $5.38 bln vs the $5.26 bln Capital IQ Consensus.
  • See key metrics above.
• FB also announced its proposal of a new class of stock so look for some updates on this on the call.

• Why it's important
  • Ad spending drives Facebook's top line, accounting for 97% of the company's revenue in the first quarter.  Facebook, therefore, is watched closely as a barometer for how advertisers are spending and where they are allocating their advertising budgets.
  • Facebook is a leadership stock for the Nasdaq and Nasdaq 100
  • The company and its stock serve as guides for the enthusiasm surrounding the growth of social media
     
• What Facebook said after its first quarter earnings report in April
  • Daily active users (DAUs) were 1.09 billion on average for March 2016 (+16% year-over-year); mobile DAUs were 989 million on average for March 2016 (+24% year-over-year)
  • Monthly active users (MAUs) were 1.65 billion as of March 31, 2016 (+15% year-over-year); mobile MAUs were 1.51 billion (+21% year-over-year)
  • The average price per ad increased 5% in the first quarter while total ad impressions increased 50% (strong growth in mobile ad impressions)
  • Will face tougher comparisons in 2016 given the acceleration of ad growth in 2015
  • Guidance
    • Non-GAAP expense growth of ~45-55% year-over-year
    • Amortization will be $700 million to $800 million
    • Stock-based compensation to be $1.1 billion to $1.3 billion in 2016
    • Sees capex at the high end of $4.0 billion to $4.5 billion range previously provided
    • Second quarter and FY16 tax rates should be similar to first quarter
       
• Other Stocks to Watch
   
  • FB
  • Alphabet (GOOG/GOOGL)
  • LinkedIn (LNKD)
  • Yelp (YELP)
  • PowerShares QQQ Trust (QQQ)
  • Global X Social Media Index ETF (SOCL)
    • FB is third largest holding at 9.37% of assets
  • S&P futures

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Click here to listen to my podcast and learn about my theory on the similarities between relationships and the stock market.

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RESULTS:

Swipe Right on BAE ($MTCH Earnings Preview)

Match Group (MTCH) will report Q2 results after the bell and host a call at 8:30am tomorrow. 

• Analysts are looking for Q2 adj. EPS of $0.16 with adj. EBITDA +37% to $88.8 mln and sales +16.5% Y/Y to $296.8 mln.

• Match guided for Q2 dating rev +4-5% Q/Q to ~$270.8-273.4 mln with a dating EBITDA margin in the low to mid-30% range vs. 26% in Q1.

• MTCH flirted with all-time highs last week and is up almost 50% since reporting strong Q1 results after its first public quarter disappointed investors in early February.
• Match dominates the online dating market in the US (with Match, OK Cupid and Plentyoffish) but Tinder is the real gem.
• The total dating business (91% rev mix) generates sales through premium (paid) members (direct revenue) and advertising (indirect rev).
• Total direct Q1 rev was up 23% as total paid member rose 36% to 5.08 mln.
• Last quarter, Tinder added 219K paid members to hit 1.02 mln (+27% Q/Q) and said it was on pace to double paid member count (PMC) this year (to 1.6 mln).
• Tinder continues to add features to its matching app to drive engagement and monetization.
• Indirect (advertising) rev accounted for just $11.4 mln (4%) of dating revenue.
  • In March, Match hired an advertising veteran to run the nascent indirect revenue (advertising) business.
• Match will be careful to roll out an advertising product that does not disrupt engagement at Tinder.
• Roughly 27% of the float is sold short and IAC (IAC) still owns 84.7% of the company after floating it (IPO) in November of last year.

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Click here to listen to my podcast and learn more about my theory on relationships and the stock market.

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$GILD Earnings Preview

Gilead Sciences is scheduled to report 2Q16 earnings on July 25 after the market closes. 

Consensus calls for 2Q16 EPS of $3.01 (vs. $3.15 last year) with revenue down 4.9% to $7.8 bln.

• The stock trades at just 7.3x FY16 EPS estimates as investors demand growth (similar story to that of AAPL). Sales and earnings are expected to fall ~4% this year. Earnings are expected to grow ~2% next year with sales down 1% as the co aggressively buys back shares.
• Investors want the co to acquire its next blockbuster drug. Last month, the CFO said it has the balance sheet to acquire a large oncology asset. Gilead bought back $15 bln shares in FY15 and commenced a $12 bln share buyback in FY16, purchasing $8 bln worth of shares in 1Q16.

FY16 Guidance

The co reiterated FY16 guidance below Consensus on April 28 when they reported 1Q16 earnings. Capital IQ Consensus calls for a 2.5% decrease in FY16 rev to ~$31.8 bln, compared to $32.6 bln in FY15.

• Net product sales: $30-31 bln
• Adj Product gross margin: 88-90%
• Adj R & D expenses: $3.2-3.5 bln
• Adj SG & A expenses: $3.3-3.6 bln
• Adj Effective tax rate: 18%-20%

1Q16 Recap

• The co reported 1Q16 earnings of $3.03/share, $0.10 worse than the Capital IQ Consensus of $3.13, rev rose 2.6% y/y to $7.79 bln vs the $8.07 bln Consensus.

Technical Analysis

Technically, GILD has been an under-performer since its last earnings report in April had its selling back down to its early Jan/Feb lows around the $82 area. Buyers will want to clear this 87/88 resistance and lift price back into the late-April bearish gap between the 92/96 zone.

The 200-day moving averages are also in play around 91/92. Sellers will simply want to keep the pressure on by dropping the stock back towards this year's lows in the 78/82 range.

Implied Vol

Based on GILD options, the current implied volatility stands at ~ 29%, which is 14% higher than historical volatility (over the past 30 days). Based on the GILD Weekly Jul29 $86.5 straddle, the options market is currently pricing in a move of ~5% in either direction by weekly expiration (Friday).

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Click here to listen to my podcast and learn more about my theory on relationships and the stock market.

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$UA Earnings Preview

Under Armour (UA) reports Q2 results tomorrow July 26 followed by conference call at 8:30am ET.

Current consensus is for Q2 EPS of $0.02, operating income of ~$19 mln on revs +28% to $1.00 bln (guided for revenues in high 20s, operating income of ~$17-19 mln and flat gross margin). Since becoming a publicly traded company, UA has never missed earnings estimates.

Last quarter, Under Armour beat Q1 EPS estimate by $0.02, reported revs in-line, guided Q2 operating income / revenues in-line and slightly raised FY16 guidance / reaffirmed margin guidance.

Headed into the print: UA has held onto these recent gains and is back near pre-Q1 levels. 

Based on UA options, the current implied volatility is 14% higher than the historical volatility (over the past 30 days). UA Weekly Jul29 $42.5 straddle is currently pricing in a move of ~8% in either direction by weekly expiration (Friday).

Key metrics and areas of interest:

• Current Quarter: Following the decision of the bankruptcy court to approve the liquidation of The Sport Authority's business rather than a restructuring or sale, Under Armour determined to recognize a Q2 impairment charge of ~ $23 mln and updated its Q2 and FY16 outlook. The company reaffirmed Q2 revenue growth in the high 20s but revised operating income to $17-19 mln (prior $40-42 mln) as a result of the impairment.
• Guidance: The Sport Authority mid-quarter update included revised 2016 guidance for operating income to ~$440 -445 mln (prior +23-24% to $503-507 mln) on net revenues +24% to $4.925 bln (prior +26% to $5.0 bln). Updated outlook will be included in the earnings press release - estimates are tracking slightly ahead of the this prior outlook with operating income of +11% to ~$453 mln estimate and revenues +25% to $4.96 bln.

Techs:

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Click here to listen to my podcast and learn about my theory on the similarities between relationships and the stock market.

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Brexit Stage Left (6/6/17 Weekly Setups)

As I've been telling you guys for months now, the rate increase is not likely to occur in June and most likely to occur in July. My rationale for this has always been two fold: 1) Brexit and 2)A rate hike now is too soon and one in September is too close to the election. Last week's data gave the markets a quick rattle but by the end of it investors and traders had been calmed by the depreciation in likelihood that the Fed would move in June. Well like a kid turning his homework in late, the market seems to be peeking over its shoulder at the Brexit event looming. With that, the market is pricing a lower possibility for a rate hike in June.

That said, we are sitting at 2100 with the potential of an all time high breakout in the stock market. My bias is that we will eventually take out the highs, continue to rally and cause capitulation before ultimately falling apart. So for now, the pain trade remains to the upside until a catalyst occurs to "shake things up". With that in mind, I'm focusing primarily on stocks that are poised for higher. Below are the SPY charts to keep an eye out including a FIBS chart for potential resistance.

AMZN

Winner winner. 717 support. 

AAPL

Could be at support retest, could be a cup and handle, could be a rollover. It all depends on how 97.5 will hold.

ADBE

Support retest held. This should be a long so long as this holds. Rising MA's should push this higher moving forward. 100.30 is the breakout.

AMBA

Heavy short interest, zero debt, channel break, and now an issued buyback. This should catch gas to the flames soon and continue its way higher. Read this post if you are interested in swinging this name and/or want more details.

BMY

This name is itching for a breakout. Here is your level.

HON

Flagging with 112 as support. Look for continuation. 

ICE

Backtest of the breakout. Ready to rip again. 

LLL

Strongest sector on the board at the moment. After months of consolidation, this sector is set to go. This one may get extended quickly so tread lightly.

MGM

Broke out of multi-month downtrend. Add it to your bullish list. Lowest Macau exposure of all the casinos. 24.35 will lead to further upside.

PLAY

Clear downtrend about to break on all time frames. Extremely bullish chase if that occurs.

PCLN

Faked a breakdown and took off. It has been in an uptrend ever since. If this plays like the market has been of late it's poised to fill the gap into the 1317 1331, and 1340 levels and possibly beyond. 

RTN

One of the strongest names in the strongest group. This had 28 weeks of consolidation. Look for a continued breakout. 

SM 

Still ready.

Heating Up (Weekly Setups $AAPL $AMZN $TSLA $TWTR $YELP)

With nearly four weeks of sideways to downside action the pundits would have you think that the market is on the verge of falling apart. The talking heads (for the most part) have you convinced that the sky is falling and that the world economy is abysmal. Hypothetically speaking, even if we are in an outright terrible place in the economy the market doesn't care. Markets unintentionally forecast several months in advance. So with that said, price is truth. Know what you're trading off of and you will be okay. Either direction. I want to be clear and advocate that I am not saying everything is rosey or that they are wrong. I'm simply saying; "Who gives a shit?"

We're not in the business of being "right" we're in the business of making money. Leave the
"being right" to the morons on television who need to fill their ego since they can't fill their bank accounts with their "trading"

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SM

After a rest, this name is nearing a breakout and is almost set to resume its trend higher.

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ZG/Z

Renewed strength with a well defined post-ER range. Keep this one on your list for a potential breakout.

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YELP

This name has founded a rejuvenation. Currently flagging and poised for higher on a breakout.

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NFLX

Aggressive call buying and at the lower end of is two year range. Strip out the competition bullshit and just look at the price action. A break of 94 sets this for round two.

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TSLA

Here are the levels. Nothing more needs to be said.

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XBI LABU IBB

XBI (and in some respect the IBB) has been building a weekly base and is poised for higher highs. The next several weeks will be key in the space as many of these names report vital data that will surely serve as a catalyst. 

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AAPL

Buffet bottom seems to be the theme here. Look for it to press up to the edge of the gap. Look for the part makers to catch a bid as well. 

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AMZN

The retail killer and giant has been basing for round two.  

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TWTR

The giant put seller has seemingly put a bottom in this stock. With volume pops in the name, this stock seems poised to break out. Using 14 as a stop this is worth a long. Look for 14.6 as the breakout level.

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QCOM

Multi-month breakout. Look for follow through.

Staring at the Sun ($SCTY Earnings)

Solar City (SCTY) is set to report Q1 results tonight after the close with a conference call to follow at 5pm ET.

Current Capital IQ consensus stands at a loss of ($2.37) on revenue of $110 mln.

Investors are still nervous following the Q4 results which saw the stock sell off sharply after the co posted soft installations Q4 results and Q1 guidance.

The company was unable to address the concerns around an increase in financing costs. They did announce two new refinancing deals this quarter which helped ease tensions.

Investors would like to see an in-depth update on financing costs and an update on installations in order to be enticed back into the stock.

Key Metrics

• MW Installed- SCTY guided for 180 MW which was below expectations and represented an 18% y/y decline and 34% q/q decline. Co reaffirmed its 2016 MW outlook for 1.25 GW. Q1 usually sees some seasonal weakness. Q4 came in at 272 MW (Guidance was 280-300 MW), +54% y/y. Co had 15 MW of projects pushed out of Q4 that were expected to be completed in Q1.
• MW Deployed- Q4 came in at 253 MW, +44% y/y.
• Cost per Watt- Q4 was $2.71, -5% y/y.
• Value of MW deployed- Q4 was $3.64 per watt.

Guidance

• SCTY continued to target 1.25 GW Installed for 2016
• The primary focus of company in 2016 is goal of generating positive cash by year-end. Wants to achieve a state where it can self-sustainably install new MW without cash balance declining.
• For Q1 2016 SCTY expects to install 180 MW, representing growth of 18% y/y, and a 34% decline q/q. This represented a higher-than-usual seasonal slowdown that it has historically experienced.
• For Q1 2016, expect GAAP Operating Expenses of $230-240 mln.
• SCTY sees Non-GAAP Loss Per Share between ($2.55) -- ($2.65).

TECHS:

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RESULTS:

SolarCity misses by $0.19, beats on revs; guides Q2 EPS below consensus, revs below consensus 

• Reports Q1 (Mar) loss of $2.56 per share, excluding non-recurring items, $0.19 worse than the Capital IQ Consensus of ($2.37); revenues rose 81.6% year/year to $122.57 mln vs the $110.02 mln Capital IQ Consensus.
  • MW Deployed 214 MW, +40% y/y (Guidance was for 180 MW).
    • "We significantly exceeded our projected 180 MW mostly due to the earlier completion of a large utility-scale project in Maryland that was originally anticipated for Q2 2016".
  • Cost per Watt of $3.18 increased 19% from the fourth quarter of 2015 largely owing to lower volumes. Installation costs decreased 6% year-over-year, albeit rising 3% quarter-over-quarter to $1.98 due strictly to a larger mix of higher cost commercial projects.
  • structured financed team recorded one of its strongest quarters yet with $728 million in total project financing raised in the quarter (and $1.1 billion through April).
  • Portfolio is 74% residential and 26% C&I and is geographically diversified across 18 states plus D.C. (38% East Coast, 34% California, 13% Arizona, 8% Nevada, and 7% other).
  • 'As this was not only our first transaction but also covered a portfolio that had a higher mix of C&I projects with 10- 15 year contract lengths than we typically install, we view this weighted average cost of capital as a starting point that will trend lower on subsequent transactions and ultimately expect this to be an important new channel for financing our growth in the future'.
  • Consolidated Gross Margins were 11%. Operating expenses were $227 million, up 54% year-overyear
• Co issues downside guidance for Q2, sees EPS of ($2.80)-($2.70), excluding non-recurring items, vs. ($2.23) Capital IQ Consensus Estimate; sees Q2 revs of $135-143 mln vs. $152.39 mln Capital IQ Consensus Estimate.
  • Expect GAAP Revenue from Periodic Billings of $105-108 million,
  • Solar Energy Systems and Components Sale Revenue of $14-16 million,
  • Revenue from Operating Lease Prepayments and Upfront Incentives of $16-19 million.
  • Operating Expenses are forecast to range between $240 million and $250 million
  • Co sees 185 MW deployed, down 2% y/y.
• Remain on target for our cost goal of $2.25 per Watt in 2017.
• Well positioned to achieve goal of generating positive cash by year-end even as we continue to add MW to our portfolio and incur cash expenditures for both research and development activities and our module manufacturing operations.

Big Rig ($RIG Earnings Preview)

Consensus for RIG calls for earnings of $0.28 and revs of $1.1 bln. If realized, that would be an EPS decrease of -75% from $0.96 and a revenue decrease of 46.2% YoY from $2.04 bln

For RIG, what matters most is the spending of oil explorers and producers. Capital spending for this group has been cut over and over again by many companies since last year, which hurts companies in the drilling and oil service and equipment industries.

For now, oil drillers are aiming to reduce costs to help try and weather the oil slump. But there may be a little relief as the oil rig count, as measured by Baker Hughes (BHI), is expected to bottom in the second quarter.

The most recent weekly oil rig count data, released last Friday, showed that oil rig fell for a sixth consecutive week and are now down at levels not seen since 2009.

Q4 recap:

• Co reports Q4 earnings of $1.68 per share on Feb 24, excluding non-recurring items, $1.04 better than the Capital IQ Consensus of $0.64; revenues fell 17.3% year/year to $1.85 bln vs the $1.41 bln Consensus
• Other revenues increased $356 million due to early contract terminations on the Polar Pioneer, Discoverer Americas, and Sedco 714
• Contract drilling revenues decreased $113 million due to reduced activity and rig retirements partially offset by higher ultra-deepwater revenue efficiency and higher demobilization revenues
• Capital expenditures totaled $665 million, down from $940 million in the prior quarter 

Getting FIT

Fitbit (FIT) is set to report earnings tonight after the close with a conference call to follow at 5pm ET.

Current consensus stands at EPS of $0.03 on revenue of $440 mln.

Key Metrics

• Gross Margin- FY16 Guidance is for the range of 48.5-49.0%; Q4 was 50.0%.
• Active Users- Q4 saw it increase 152% to 16.9 mln; Economies of Scale will press this number lower but the rate will be closely watched.
• Sales & Marketing- With the launch of two new products, FIT noted that this expense would see an increase. Q4 came in at $15.7 mln.
• Devices: FIT sold 8.2 mln health and fitness decvices in Q4, up 54% y/y.

Q1 Guidanc

• EPS expected to be in the range of $0.00-0.02.
• Revenues expected to be in the range of $420-440 mln.

FY16 Guidanc

• FY16 EPS expected to be in the range of $1.08-1.20
• Revenue expected to be in the range of $2.4-2.5 bln.