Stock Market

Earnings season for the fourth quarter of calendar 2023 is coming to a close. Clear winners and losers are emerging from the reports. The stocks behind them react dramatically to the results and investor portfolios get violently jostled by the prints. While Wall Street and Main Street were surprised by many of the reports, overall this has been a strong earnings season.

Nearly 80% of companies listed in the benchmark S&P 500 index reported their results with three-quarters announcing better-than-expected profits. Nearly two-thirds have topped sales forecasts, according to data from FactSet. That said, the companies that missed targets, missed by a wide margin and sent share prices plunging. As the reports come to a close in the coming days, we give an earnings season scorecard: four stock superstars and three that fell short.

Superstars: Nvidia (NVDA)

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We’ll start with the ultimate earnings season superstar, Nvidia (NASDAQ:NVDA). The chipmaker not only had a spectacular print but it also helped save the artificial intelligence (AI) trade. The chipmaker kept the overall stock market rally going. All three U.S. stock indices fell in the three days leading into Nvidia’s earnings and then rallied more than 2% the day after the print. As for NVDA stock, it rose 16% immediately after its financial results were disclosed, bringing its year-to-date increase to 64%. Nvidia’s market capitalization briefly broke through the $2 trillion threshold before settling down just beneath it.

Nvidia faced sky-high expectations heading into its earnings and confidently jumped the bar. The chipmaker announced earnings per share (EPS) of $5.16 compared to $4.64 that analysts expected. Fiscal fourth-quarter revenue totaled $22.1 billion versus the $20.6 billion that was anticipated. Nvidia’s sales were up 265% from a year earlier and profits grew 769% year over year. Looking ahead, Nvidia forecast sales in the current quarter of $24 billion. Analysts polled by LSEG were expecting sales of $22.2 billion. Demand for its AI chips remains red hot.

Carvana (CVNA)

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Carvana’s (NYSE:CVNA) stock rose 32% in a single day after the used car retailer reported its first-ever quarterly profit. That was one of the best performances of any stock coming out of the Q4 2023 earnings season. The company shocked analysts and investors by announcing a profit of $450 million for all of 2023. A year earlier, it reported a loss of $1.59 billion. Additionally, Carvana forecast a profit for the current first quarter that will be above $100 million. To achieve profitability, Carvana has cut costs by trimming inventory and reducing its advertising budget in recent months.

The company also reported retail gross profit per unit of $2,812, representing a seven-fold increase from the final quarter of 2022. The company, which allows customers to buy used cars online, proved popular during Covid-19 lockdowns but had struggled coming out of the pandemic. In terms of guidance, Carvana also said it expects the number of used vehicles it sells in the first quarter of this year to be higher than last year. It was all music to the ears of investors, who bid CVNA stock up sharply. The company’s share price has now risen an incredible 675% in the last 12 months.

Moderna (MRNA)

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Ailing Covid-19 vaccine maker Moderna (NASDAQ:MRNA) also posted a surprise profit for Q4 2023, sending its share price up 17% for its best one-day performance in 18 months. Since peaking in September 2021, MRNA stock has steadily declined as its vaccine sales dwindled. But the company managed to overcome falling sales volumes by raising the price it charges for the Covid-19 vaccine. It turned a profit as a result. The company reported EPS of 55 cents, which was much better than the 97-cent loss Wall Street expected.

Revenue in the quarter totaled $2.81 billion, which topped the $2.5 billion that was forecast among analysts. The better-than-expected results come despite sales of Moderna’s Covid-19 vaccine declining 43% in Q4 from a year ago. In addition to raising prices, Moderna also undertook strict cost-control measures that boosted profitability. The company reiterated its previous full-year 2024 sales outlook of $4 billion and said it will continue to reduce expenses this year. Moderna has said it expects to return to sales growth in 2025 and break even by 2026 with the launch of new products.

MRNA stock is down 14% on the year but continues to rise after its strong Q4 print.

Block (SQ)

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Digital payments firm Block (NYSE:SQ) also got a big lift from its recent earnings. The company run by Jack Dorsey saw its stock vault 16% higher after it reported a strong quarterly profit due in large part to a $207 million gain in its Bitcoin (BTC-USD) holdings. The company reported $562 million in Q4 earnings, which was well above consensus expectations of $448 million. Much of that profit was due to a gain of $207 million on Bitcoin. As of Dec. 31, Block held 8,038 BTC valued at $340 million.

The company also said it made $66 million in profit on Bitcoin sales last quarter through its Cash App banking platform, which was a 90% increase from a year ago. CEO Dorsey is a big proponent of cryptocurrencies. The company changed its name to Block to reflect its increasing focus on crypto and its underlying blockchain. Block also reported that it had 56 million monthly active users for Cash App, with most of those customers using it for peer-to-peer payments. SQ stock is now up nearly 10% this year following struggles since the 2022 bear market.

Fell Short: Palo Alto Networks (PANW)

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Few if any companies had as big an earnings miss in recent weeks as cybersecurity firm Palo Alto Networks (NASDAQ:PANW). The company’s stock fell 30% for its worst day since its 2012 initial public offering (IPO) after it reported lower full-year guidance for both revenue and billings. Nobody seemed to care that Palo Alto Networks latest financial results managed to beat Wall Street forecasts on the top and bottom lines. All anyone focused on was the disappointing guidance, sending the stock plunging.

The company said it now foresees full-year billings of $10.1 billion to $10.2 billion. That was down from previous guidance of $10.7 billion to $10.8 billion. Palo Alto Networks also expects full-year revenue between $7.95 billion and $8 billion, which is also lower than a previous guide for $8.15 billion to $8.2 billion. Guidance for the current first quarter also fell short of estimates. Management said during their earnings call that the lowered guidance was due to a shift in strategy and wanting to accelerate growth in AI products. PANW stock is now down 2% on the year.

Peloton (PTON)

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Rivalling Palo Alto Networks for the worst print of Q4 2023 earnings season was Peloton (NASDAQ:PTON). The maker of internet-connected stationary bikes and treadmills warned of widening losses this year as it tries to execute a turnaround strategy. Specifically, the company guided for a loss in the current quarter of $20 million to $30 million. Wall Street was anticipating a loss of $2 million. The weak guidance was issued along with disappointing results for the final quarter of last year.

The company reported a loss per share of 54 cents versus an estimated 53 cents loss. Revenue came in at $743.6 million compared to $733.5 million, which had been the consensus estimate among analysts that track the company’s progress. Peloton said it is struggling to grow its paid app subscribers and sees an uncertain macroeconomic outlook. The company also said it expects to return to revenue growth within a year based on current market conditions. As one might expect, PTON stock fell sharply after the Q4 print and guidance. The share price is down 66% in the last 12 months.

Pinterest (PINS)

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Pinterest’s (NYSE:PINS) stock fell 10% after the social media company reported revenues that missed Wall Street’s targets and issued soft guidance. The company reported EPS of 53 cents versus 51 cents that was expected on Wall Street. However, revenue came in at $981 million versus the $991 million consensus forecast. Monthly active users on Pinterest rose 11% in Q4 from a year earlier to 498 million, topping estimates of 487 million. But the company said its average revenue per user was $2, lower than analyst estimates of $2.05.

Looking forward, Pinterest said it foresees revenue of $690 million to $705 million for the current first quarter of 2024, which represents annualized growth of 15% to 17%. Analysts had been looking for more growth from the social media company. PINS stock initially fell 28% after the earnings print but pared some of that decline after a new partnership with Google parent company Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) was announced. The Google arrangement will focus on third-party online advertisements. The stock of Pinterest is now down 1% in 2024 and slumping.

On the date of publication, Joel Baglole held long positions in NVDA and GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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