The markets had a down week with the DOW30, S&P500, and NASDAQ ending -1.22%, -2.45%, and -3.11%, respectively.
Most of the earnings of the companies we trade have reported. Some stocks had positive results, while others temporarily pulled back. As long as you've diversified your portfolio, you'll be fine in the long run.
Earnings 📰
AAPL
Apple posted an earnings surprise of 5.88% for the quarter ending June 2023. Revenues for the quarter were $81.8 billion, albeit lower than last year's revenues of $82.96 billion. iPhone:
Actual Revenue: $39.67 billion
Estimated Revenue: $39.9 billion
Previous Revenue: $40.67 billion
Mac:
Actual Revenue: $6.84 billion
Estimated Revenue: $6.6 billion
Previous Revenue: $7.38 billion
iPad:
Actual Revenue: $5.79 billion
Estimated Revenue: $6.4 billion
Previous Revenue: $7.22 billion
Wearables, Home, and Accessories:
Actual Revenue: $8.28 billion
Estimated Revenue: $8.4 billion
Previous Revenue: $8.08 billion
Services:
Actual Revenue: $21.21 billion
Estimated Revenue: $20.8 billion
Previous Revenue: $19.60 billion
AMD AMD reported Q2 2023 revenue of $5.4 billion and a net income of $27 million. Despite these figures beating estimates for both profit and revenue, AMD’s stock fell 6% in extended trading due to a Q3 forecast that fell short of Wall Street expectations. This decline was primarily due to a year-on-year revenue decrease in the Data Center and Client segments, partially offset by the growing demand for EPYC and Ryzen processors and strength in the Embedded segment. AMD CEO, Dr. Lisa Su, also announced increased AI engagements and expected production ramping of MI300 accelerators in Q4.
The company's Data Center revenue was $1.3 billion, Client segment revenue was $998 million, Gaming segment revenue was $1.6 billion, and Embedded segment revenue was $1.5 billion. Revenue performance varied across segments with some experiencing year-over-year decreases due to factors like lower processor sales and soft enterprise demand, but there was growth in other segments like Embedded due to strength in various markets. For Q3 2023, AMD expects revenue to be around $5.7 billion.
AMZN
Amazon's revenue for the quarter was $134.38 billion and marking an increase from last year's revenues of $121.23 billion. For Q3 2023, Amazon projects its net sales to range from $138 billion to $143 billion, which represents a year-over-year growth of 9-13% compared to the same quarter in the previous year.
SBUX
Starbucks reported revenues of $9.17 billion for the quarter that ended in June 2023. This is compared to revenues of $8.15 billion from the same quarter last year. Over the past four quarters, the company has only exceeded consensus revenue estimates once. Since the start of the year, Starbucks shares have seen a 2.4% increase, compared to the 19.5% gain of the S&P 500.
Key Statistics
Revenue: Expected $9.29 billion vs Reported $9.17 billion
Fiscal Q3 net income attributable to Starbucks: $1.41 billion or 99 cents per share, up from $912.9 million or 79 cents per share a year earlier.
Operating margin expanded from 15.9% to 17.3%, due to productivity improvements and higher menu prices.
Net sales rose by 12% to $9.17 billion.
Same-store sales grew by 10%, falling short of estimates of 11%.
Geographical Performance
North America: Same-store sales grew by 7%, missing estimates of 8.4%. However, customer traffic increased by 1% in the quarter. More customers were buying breakfast sandwiches and adding pricey extras like cold foam to beverages.
International markets: Same-store sales increased by 24%, falling short of estimates of 24.2%. China, Starbucks' second-largest market, saw a 46% surge in same-store sales.
Product Insights
Cold drinks accounted for three quarters of U.S. beverage orders, signifying a shift in consumer preferences from hot coffee.
Larger sizes of drinks saw growth over smaller sizes, indicating no down trading in the customer base, according to CEO Laxman Narasimhan.
Steve's Thoughts
I believe these companies are still great long-term holds in our portfolios. Though Apple had a flat quarter compared to last year's, I believe sales will pick up again in the third and fourth quarter as they begin to release their new products and we enter the holiday season.
We may be experiencing a slight pullback or consolidation (sideways trend), but don't be discouraged. This usually happens in August when many institutional traders go on vacation, and they want to sell some of their shares to lock in profits.
I'm planning on holding off with buying anymore shares until I see higher highs and higher lows made. I'm still bullish from now until the end of the year, but neutral to slightly bearish in the short term. I'll let you all know when I start purchasing more shares in the future.
Steve's Trades
AMD
I believe AMD may go into consolidation in the next couple of weeks, which is why I'm deciding to set up some bear call spreads. Again, I am bullish on AMD in the long-term, but slightly neutral to bearish in the short term.
AMD Bear Call Spread
Expiration Date: September 08, 2023
Step 1: Buy 1 $170 strike call option (delta 0.01) for $10
Step 2: Sell 1 $135 strike call option (delta 0.16) for $121 Step 3: Set a buy-stop order of 100 shares at $134
Credit/premium received: $111
For all my other wheels, I am still selling OTM covered calls against my shares to collect more premium. I'm currently going to let my capital sit as cash until I see technical evidence that institutions are putting their money back into the market.
In the end, tweak the numbers to your liking and risk tolerance.
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Have a wonderful weekend! 🙂
-Steve and the Call to Leap Team
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