Top US stocks to watch before the bell: Boeing, Spotify and Tesla

Boeing’s loss narrows as deliveries improve, Spotify beats expectations but disappoints with its guidance, Tesla’s bitcoin rises in value, Microsoft and Alphabet both report strong growth, Shopify’s revenue more than doubles, and Starbucks and Yum Brands eye a recovery this year.

USA (1)

Boeing

Aircraft maker Boeing reported a significantly narrower quarterly loss as deliveries of its 737 MAX jets improved and airlines prepare to stage a recovery this summer.

The company reported an operating loss of $353 million in the first quarter compared to a $1.7 billion loss the year before. Revenue fell to $15.2 billion from $16.9 billion.

Boeing’s 737 MAX planes were cleared to resume flying last year after two fatal accidents and deliveries restarted in late March, which should lead to better results going forward. However, further doubt was cast when it revealed a new electrical problem on some planes earlier this month.

Spotify

Spotify revealed it acquired more paid subscribers than expected during the first quarter of 2021, boosted by growth in both new and existing markets.

The music streaming service said premium subscribers, which drive the bulk of its revenue, jumped 21% year-on-year to 158 million. That was ahead of the 157.5 million expected by analysts. Total monthly active users jumped 24% to 356 million. Revenue rose to EUR2.15 billion from EUR1.85 billion and came in slightly better than expected.

Spotify said growth in the US, Mexico, Russia and India offset lower than expected growth in Latin America and Europe. It also launched a new podcast subscription service following a similar launch by Apple. However, its outlook disappointed as it forecast it will report 162 to 166 million premium subscribers at the end of the second quarter was below the 166.1 million forecast by analysts.

Tesla

Tesla has revealed that its bitcoin was valued at $2.48 billion at the end of March, suggesting it has already made a $1 billion profit on its original investment.

The electric carmaker said it bought around $1.5 billion worth of bitcoin during the first quarter of 2021 and earlier this month said it had sold about 10% of its holding for gross proceeds of around $272 million and a net profit of $101 million.

Tesla surprised the market by buying bitcoin but the company has said it does not intend to do this regularly. Chief executive Elon Musk said the company had bought and sold bitcoin as a way to ‘prove liquidity of bitcoin as an alternative to holding cash on [the] balance sheet’.

Alphabet

Alphabet, the parent company of Google, reported record profits in the first quarter of 2021 on Tuesday, prompting it to launch a new $50 billion share buyback.

Overall revenue rose 34% to $55.3 billion, considerably better than the 26% growth expected by analysts. Quarterly profit of $26.29 per share beat expectations for $15.88. It continues to benefit from people living more of their lives online during the pandemic, but it warned that the increase in usage and ad sales could unwind as people return to their normal lives.

The new share buyback programme will be on top of the $25 billion buyback launched in 2019 that is still in progress.

Microsoft

Microsoft posted strong growth in revenue and earnings during the first three months of the year after benefiting from a number of one-off tax and currency tailwinds.

Revenue of $41.7 billion was better than the $41.03 billion expected, while adjusted earnings of $1.95 per share was better than the $1.78 forecast by analysts. Net income was up 44% year-on-year to $15.5 billion. Its range of products and services – including its gaming, cloud-computing, LinkedIn social media platform and its Teams collaboration app – have all seen increased demand during the pandemic.

However, shares were not spurred higher once the results were released thanks to one-off benefits from tax and currency tailwinds flattering its results.

General Dynamics

General Dynamics said an improvement in its aerospace unit and continued growth from its more resilient defence division resulted in 7% revenue growth in the first three months of the year.

The company said it delivered 28 Gulfstream jets in the period compared to only 23 the year before, but this was lower than the 40 shipped in the fourth quarter of 2020. Aerospace revenue improved to $1.89 billion from $1.69 billion.

Overall revenue rose to $9.39 billion from $8.75 billion while net earnings inched up to $708 million from $706 million, boosted by its more resilient defence division.

Yum Brands

Yum Brands, the owner of KFC, Taco Bell and Pizza Hut, marginally beat expectations in the first three months of the year as more customers return to its restaurants and the US economy reopens.

The company said the easing of dining room capacity restrictions had led to more people eating out. Comparable sales rose 9% year-on-year, beating expectations for 8.6% growth. Net income rose to $326 million from $83 million the year before.

Shopify

Shopify said revenue more than doubled in the first quarter as it continues to benefit from the shift to online shopping during the pandemic.

Revenue rose 110% to $988.6 million, coming in well ahead of the $865.5 million forecast by analysts. Gross merchandise value was up 114% to $37.3 billion and beat expectations of $34.38 billion, representing at least the sixth consecutive quarter it has topped estimates.

Advanced Micro Devices

Advanced Micro Devices raised its revenue guidance for the full year after beating expectations in the first quarter as it remains confident it can source the chips it needs despite a global shortage in supplies.

Revenue in the first three months of the year jumped 93% to $3.45 billion and came in well ahead of the $3.21 billion expected by analysts. Earnings per share excluding items of 52 cents was also better than the 44-cent forecast.

AMD said it expects annual revenue this year to rise 50%, faster than its previous 39% growth target.

Amgen

Amgen reported lower revenue and profits in the first quarter due to lower drug prices, increased competition, and because the pandemic continues to deter people from visiting their doctor for other healthcare needs.

Adjusted EPS fell 12% to $3.70 and missed the $4.04 expected by analysts. Amgen warned that it expects net selling prices to decline this year due to more competition entering the market, including from generic drugs.

Amgen reiterated its target to deliver revenue of between $25.8 billion to $26.6 billion and adjusted EPS of $16 to $18 in 2021, but lowered its net EPS target to a range of $9.11 to $10.71 from $12.12 to $13.17 previously.

Pinterest

Pinterest reported stronger revenue growth than expected in the first quarter and said it expects this to accelerate further in the second despite reporting slower growth in user numbers.

The company said revenue was up 78% in the quarter at $485 million, ahead of the $473.7 million forecast by analysts. It said it expects to report a 105% year-on-year lift in revenue during the second quarter, which was also more than analysts had expected.

Still, Pinterest said monthly active users grew by 30% year-on-year in the quarter to 478 million, representing a slowdown from the 37% growth delivered in the previous quarter.

Starbucks

Starbucks on Tuesday reported worse than expected sales figures in the second quarter of its financial year as it continues to struggle during the pandemic, but raised its full year guidance on hopes more people will return to buying coffee as the economy reopens.

Revenue rose 11% in the quarter to $6.67 billion but missed expectations of $6.82 billion.

Starbucks said it now expects annual revenue in the current financial year to come in between $28.5 billion and $29.3 billion, up from $28.0 to $29.0 billion, and for adjusted EPS of $2.90 to $3.00 compared to its previous target range of $2.70 to $2.90.

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