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Earnings: Up Close with AAPL, FB, TWTR, LNKD, and LLY

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April 25, 2016
Earnings: Up Close with AAPL, FB, TWTR, LNKD, and LLY

This is a busy earnings week with Apple (AAPL) and the social-media trio of Facebook (FB), Twitter (TWTR) and LinkedIn (LNKD) scheduled to report. What will these high-profile tech names say about the state of social media?

Slice of Apple

It’s been a rough patch for technology companies that have already reported quarterly earnings. Will AAPL be able to help turn that situation around this quarter?

That’s part of what analysts will be listening for when executives talk to investors after the fiscal Q2 earnings release after the bell on Tuesday. AAPL’s executives already have laid the groundwork by forecasting a decline in revenue, mostly because of an iPhone 6 sales drop compared with last year. AAPL’s got a place in many tech segments, but its smartphones still powers the firm’s top and bottom lines.

AAPL has not reported lower quarterly sales in 13 years and this could be the first time its iPhones sales have slowed on a quarter-over-quarter basis since it was introduced in 2007. But analysts say this quarterly decline shouldn’t be a surprise, considering the year-ago results were off the charts with iPhone revenue up 55% and overall sales higher by 27%. Could AAPL get back on that upward track when it updates investors on the iPhone 7 in September?

For now, analysts reporting to Thomson Reuters are pegging a per-share profit of $2.00, a 14% pullback from the year-ago results; revenue is projected to drop 10% to $51.97 billion.

Short-term options traders have priced in a potential 4% share price move in either direction around the earnings release, according to the Market Maker Move indicator on the thinkorswim® platform from TD Ameritrade.

Going into earnings, the options trading volume is active at the 110-strike calls with at the money put action at the 105 strike. The implied volatility is at the 23rd percentile. (Please remember past performance is no guarantee of future results.)

apple aapl earnings preview

FIGURE 1: A TART TRACK RECORD FOR AAPL.

Shares have seen some wild swings since late last year. But in recent sessions AAPL has been trading at about the same levels from late 2015. Chart source: thinkorswim® by TD Ameritrade.  Data source: Standard & Poor’s. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

Tweeting for TWTR

TWTR has done plenty in the last quarter to step up its efforts to monetize its huge database of active monthly users. It has overhauled management, starting with bringing back co-founder Jack Dorsey, and it has rolled out new features. Has any of it worked to put the brakes on the deceleration of revenue and new-user growth?

We’ll find out when results are announced after the markets close Tuesday. If the average forecast by analysts at Thomson Reuters are correct, the numbers might be turning around. For the quarter, they are projecting a 39% jump in revenues to $607.8 million with earnings per share climbing 43% to $0.10.

Short-term options traders have priced in a potential 10% share price move in either direction around the earnings release, according to the Market Maker Move indicator.

Going into earnings, the options trading volume is active at the 18- and 20-strike calls with action at the 15.5-strike puts. The implied volatility is relatively high for this earnings season at the 46th percentile.

twitter twtr earnings preview

FIGURE 2: TWTR TRADING IN TIGHT RANGE.

In the last year, TWTR’s stock has lost some 67%. But since bottoming in early February, shares have soared higher by more than 20%. Chart source: thinkorswim® by TD Ameritrade.  Data source: Standard & Poor’s. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

What’s Up Next at FB?

FB is the 800 lb. gorilla in social media, racking up impressive sales and earnings quarter after quarter. Can the king of social do it again?

Earlier this month, Chief Executive Mark Zuckerberg shared a list of strategic moves that FB has planned for the next 10 years, including pushing its Messenger chat and chatbots, as well as stepping up live video with virtual reality and other network enhancements. Is there more?

Many analysts have high expectations for FB, with top-line sales projected to climb 48% to $5.28 million, while earnings could rise 48% as well, to $0.62.

Short-term options traders have priced in a potential 5.5% share price move in either direction around the earnings release, according to the Market Maker Move indicator.

Going into earnings, the options trading volume is active at the 115-strike calls and 105-strike puts. The implied volatility is also relatively high for this earnings season at the 58th percentile.

facebook fb earnings preview

FIGURE 3: FB’S STEADY CLIMB.

Since bottoming in late January, FB shares have climbed 17%. Chart source: thinkorswim® by TD Ameritrade.  Data source: Standard & Poor’s. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

Where’s the Link for LinkedIn?

LNKD’s fiscal Q4 results, announced in February, were showstoppers that wildly outpaced Wall Street’s expectations. But in a what-can-you-do-for-us-now mentality, investors shot down LNKD stock some 44% to a three-year low when executives cast a shadow over Q1 guidance. What did they say? That a reshuffling of product strategy would take a cut out of short-term sales growth. What will they say after announcing earnings on Thursday after the bell?

Analysts polled at Thomson Reuters are expecting revenues to jump 39% to $829.5 million while earnings per-share are projected to climb 5% to $0.60.

Short-term options traders have priced in a potential 11% share price move in either direction around the earnings release, according to the Market Maker Move indicator.

LNKD is not a big in options trading but some activity is showing up in the 120- and 125-strike calls going into earnings. On the puts side, we’re seeing some action in the 115 strike. The implied volatility is also very high for this earnings season at the 84th percentile.

linkedin lnkd earnings preview

FIGURE 4: LNKD’S HOLDING PATTERN.

LNKD executives spooked investors after its fiscal Q4 earnings report in February by tempering Q1 expectations. The stock tanked 44% that day and has been holding in a tight range ever since. Chart source: thinkorswim® by TD Ameritrade.  Data source: Standard & Poor’s. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

Eli Lilly Registers Too

Also up this week are earnings results from pharma giant Eli Lilly (LLY) before the opening bell on Tuesday. Analysts reporting to Thomson Reuters are looking for earnings per share of $0.85, down from $0.87 a year ago, on revenues that are up to $4.8 billion from $4.6 billion last year.

Short-term options traders have priced in a potential 3% share price move in either direction around the earnings release, according to the Market Maker Move indicator.

LLY is not a big in options trading with some activity surfacing only in the 80-strike calls. The implied volatility is at the 34th percentile compared with its historical volatility at only the 3rd percentile.

eli lilly lly earnings preview

FIGURE 5: LLY’S UPS AND DOWNS.

e bottoming out at a 52-week trough in mid-March, LLY shares have advanced 12%. Chart source: thinkorswim® by TD Ameritrade.  Data source: Standard & Poor’s. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

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