It was a hard trading day on Thursday for the technology sector as the tech-heavy Nasdaq Composite dropped 2.05% at 14,063 following the significant declines for Tesla, Netflix, and other tech giants after posting their Q2 earnings reports.
Tesla plunged 9.7% despite higher income:
Even though Tesla had reported stronger-than-expected revenues and profits for Q2, 2023, the stock ended the session down by 9.7% to $262.90, its worst day since April, as profit margins came in below expectations at a time investors are concerned about its future profitability after it cut prices for its EV-electric vehicles.
Tesla stock, Daily chart
Tesla had recently cut prices for its products such as EVs, solar panels, and batteries to boost sales and profits amid increasing global competition and poor economic sentiment due to record-high inflation and higher borrowing costs rates.
The company reported a net income of $2.7 billion in the second quarter of 2023, a 20% increase from a year ago, while its Earnings per share also rose 20% to 78 cents, with Total revenue rising 47% to $24.93 billion.
Investors turned net sellers on Tesla yesterday which sank as much as 10% intraday after CEO Elon Musk and other executives said on the earnings call that vehicle production would slow during the third quarter due to shutdowns for factory improvements.
Musk said that they expect Q3 production to be a little bit down because they have got summer shutdowns for a lot of factory upgrades, while they continue targeting 1.8 million vehicle deliveries in 2023.
Netflix tumbled 8.41%:
Shares of the streaming giant Netflix dropped 8.41% to $437 on lower-than-expected Q2 revenue readings, as the company posted $8.19 billion in revenue, falling short of the $8.3 billion anticipated by analysts. The revenues were up 3% from $7.97 billion in the prior-year period, while the Net income rose to $1.49 billion from $1.44 billion in the year-ago quarter.
Netflix also announced that it added 5.9 million customers during the second quarter amid its broader crackdown on password sharing in the U.S., while it would roll out its new ad-supported streaming tier and push to boost subscriptions by rooting out account sharing.
Despite the recent losses, Netflix shares are still up nearly 48% for the year so far, following the general optimism around the “red hot” AI ecosystem, which could boost its revenues in the longer term.
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