Microsoft, Facebook & Tesla All Better Than Expected

Three of the top companies in the S&P 500 have posted better-than-expected results in quarterly earnings and sales in their most recent quarters reported this afternoon.

Microsoft (NASDAQ:MSFT) has posted another positive surprise on fiscal Q2 2020 earnings and revenues after hours Wednesday afternoon, with earnings of $1.51 per share on $36.91 billion in quarterly sales. These compare favorably with expectations for $1.32 per share (itself a 20% year-over-year upswing) on $35.7 billion. Today’s actuals amount to a 14% gain on the top line.

Office 365, up 27% in the quarter, is part of the Productivity & Business segment, which grew 17% in Q4. Intelligent Cloud rose 27%, with Azure revenues up 62% on revenue growth. This was a big quarter, even for a company which has posted an average of nearly 10% positive surprise on earnings over the trailing 4 quarters. Microsoft’s last miss was way back in fiscal Q3 2016. Shares are up 3.5% in today’s late trading.

Facebook (NASDAQ:FB) also posted positive results in its Q4 results, beating bottom-line estimates by 4 cents to $2.56 per share on $21.08 billion in revenues, up nearly 25% year over year. Daily Active Users (DAU) were slightly above expectations at 1.66 million, while Monthly Active Users (MAU) also grew, to 2.5 billion.

While these mark “good” numbers for Facebook, shares are selling off more than 7% in late trading. Part of this must be a “sell the news” moment for a company that had grown 60% in 2019. And beating earnings estimates for Facebook is not a given — two of the last five quarters have disappointed the street, for a trailing 4-quarter average of -20%. So today’s sell-off in the face of moderately better actuals may be a short-term event.

Tesla (NASDAQ:TSLA) also posted better-than-expected Q4 earnings and sales: $2.14 per share was well beyond the $1.62 in the Zacks consensus, as well as better than the $1.93 per share reported in the year-ago quarter. Revenues of $7.38 billion also improved on the $7.05 billion expected, and ramped-up expectations from the company on auto production for 2020 is now at 500K, moving the stock upwards 6.4% in late trading. By comparison, 360K autos were built in 2019, which also surpassed expectations.

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