US stocks experienced a mixed session overnight with the tech-based NASDAQ tumbling -2.3% while the Dow eked out a gain of +0.5%, not an unusual scenario during reporting season. Disappointing earnings from Tesla Inc (TSLA US) and Netflix (NFLX US) dragged the influential tech sector lower with Netflix (NFL US) falling -8.4% after reporting worse than expected revenue, by contrast, United Airlines (UAL US) rose +3.2% after raising its profit outlook.
- We continue to look for a ~8% correction by the NASDAQ with last night’s earnings numbers potentially the catalyst for the move to commence.
MM is neutral on US tech stocks short-term
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Carmaker Tesla (TSLA US) was the worst-performing major constituent dropping -9.7% after reporting its already-shrinking profitability is likely to remain under pressure. On the day the share price appeared to suffer from the lofty expectations of the result while the prioritization of sales over margins is starting to filter down to the bottom line i.e. after rallying 3-fold investors want to see solid earnings although as we saw overnight a correction is likely.
- We are now looking for a pullback by Tesla of a similar magnitude to that through February and April i.e. around 20% from this week’s high.
MM is neutral TSLA US at best
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