#PreMarket Primer: Thursday, July 24: Facebook Proves Its Worth
Facebook’s better than expected earnings report helped the stock push to record highs on Wednesday.
Helped by exceedingly strong mobile and ad revenue, Facebook’s profits more than doubled and revenue came in at the top end of estimates, proving that the company is a viable advertiser.
Facebook also announced that it had gained 40 million new users from around the globe in the second quarter, silencing critics who said the site was losing its appeal to teens and those with privacy concerns.
In other news around the markets:
- With Deutsche Bank’s financial reporting methods under review, the company’s CFO Stefan Krause is being heavily criticized for his inadequate attempts to rectify reporting errors. The bank has been accused of reporting erroneous financial information for years, despite knowing about the problem.
- On Wednesday, two Ukrainian fighter jets were shot down in nearly the same location that the Malaysian Airlines passenger plane was downed last week. US intelligence and Ukrainian officials have accused Russia of continuing to supply rebels with advanced weaponry despite international outrage over the passenger plane crash. The continued fighting implies that Russia is not willing to use its influence to stop the conflict as Western leaders have been urging.
- Fighting in Gaza continued as both Israel and Palestinian Islamists were unable to agree on a ceasefire agreement. On Wednesday an official in Cairo, where the truce is being brokered, said an agreement would be possible before the weekend, but US officials say it is unlikely. Israeli forces are still working to destroy cross border tunnels that have been used by Hamas, but the death toll is up to more than 700 people, with many of those being civilians.
- Data out on Thursday showed that China’s factory activity was on the rise, a good sign for the Chinese economy. The nation’s preliminary HSBC Manufacturing Purchasing Managers’ Index was up to 52 in July from just 50.7 in June. The figure marks China’s strongest manufacturing PMI reading in a year and a half.
Asian markets were mostly higher with the exception of the NIKKEI and the KOSPI, which lost 0.29 percent and 0.08 percent respectively. The Shanghai composite gained 1.28 percent, the Shenzhen composite was up 0.33 percent and the Hang Seng index rose 0.71 percent.
European markets were up across the board; the FTSE rose 0.15 percent, the STOXX 600 was up 0.37 percent, the DAX gained 0.31 percent, the CAC 40 was up 0.67 percent and the MIB had the largest gains, up 1.38 percent.
Energy futures were moderately lower; Brent futures lost 0.30 percent and WTI futures were down 0.35 percent. Gold and silver were down 0.57 percent and 0.89 percent respectively, but industrial metals were mostly higher with the exception of aluminum, which lost 1.32 percent. Copper was up 1.20 percent, zinc gained 0.13 percent and tin was up 0.57 percent.
Currency markets were quiet on Thursday; the euro was steady at $1.3479 and gained 0.20 percent against the yen and 0.27 percent against the pound. The dollar was up 0.09 percent against the yen and 0.15 percent against the pound, but lost 0.11 percent against the franc.
Notable earnings released on Wednesday included:
- AT&T (NYSE: T) reported second quarter EPS of $0.62 on revenue of $32.60 billion, compared to last year’s EPS of $0.67 on revenue of $32.08 billion.
- Boeing Company (NYSE: BA) reported second quarter EPS of $2.24 on revenue of $22.05 billion, compared to last year’s EPS of $1.67 on revenue of $21.82 billion.
- PepsiCo (NYSE: PEP) reported second quarter EPS of $1.32 on revenue of $16.89 billion, compared to last year’s EPS of $1.31 on revenue of $16.81 billion.
- Dow Chemical Company (NYSE: DOW) reported second quarter EPS of $0.74 on revenue of $14.92 billion, compared to last year’s EPS of $0.64 on revenue of $14.58 billion.
- Facebook (NASDAQ: FB) reported second quarter EPS of $0.42 on revenue of $2.91 billion, compared to last year’s EPS of $0.19 on revenue of $1.81 billion.
Stocks moving in the Premarket included:
- Microsoft (NASDAQ: MSFT) was up 0.27 percent in premarket trade after gaining 1.79 percent over the past week.
- Verizon Communications (NYSE: VZ) gained 0.22 percent in premarket trade after choppy trading took the stock down 0.10 percent over the past five days.
- Transocean Ltd (NYSE: RIG) was down 0.35 percent in premarket trade after falling 0.87 percent on Wednesday.
- AbbVie (NYSE: ABBV) fell 0.33 percent in premarket trade after gaining 1.55 percent over the past week.
Notable earnings releases expected on Thursday include:
- General Motors Company (NYSE: GM) is expected to report second quarter EPS of $0.95 on revenue of $40.63 billion, compared to last year’s EPS of $0.84 on revenue of $39.08 billion.
- Ford Motor Company (NYSE: F) is expected to report second quarter EPS of $0.38 on revenue of $36.13 billion, compared to last year’s EPS of $0.45 on revenue of $36.08 billion.
- Amazon.com (NASDAQ: AMZN) is expected to report a second quarter loss of $0.15 on revenue of $19.34 billion, compared to last year’s EPS of $0.02 on revenue of $15.70 billion.
- Caterpillar (NYSE: CAT) is expected to report second quarter EPS of $1.50 on revenue of $14.44 billion, compared to last year’s EPS of $1.45 on revenue of $14.62 billion.
Thursday will be a busy day for economic data with notable releases including French services and manufacturing PMI, German services and manufacturing PMI, the Spanish unemployment rate, British retail sales, US initial and continuing jobless claims, and US new home sales.
For a recap of Wednesday’s market action, click here.
Tune into Benzinga’s #PreMarket Prep today to hear Fari Hamzei, Lydia Idem Finkley, Paul Scolardi & Mark Sebastian by clicking here!
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