Even Elon Musk Can't Fight the Fed

BigTech is Showing Signs of Major Weakness

If you want to follow my insights on stocks, investing and stock trading including buy alerts and so forth, you can do so?here.

https://stockquest.substack.com/subscribe

Even FAANG can't fight the Fed

Hey Guys,

So this week is a big week for BigTech earnings, that have a bubble share of the S&P and NASDAQ. Passive funds have made these few stocks too big for their own good.

So what’s happening this week so far?

• The NASDAQ today April 26th, 2022 was down 4%, which means a major sell-off is taking place in BigTech.
• Snap reported a ‘challenging’ quarter that missed sales and profit estimates.
• The fallout recently of Facebook and Netflix means FAANG is under threat.
• Alphabet reports miss on earnings and revenue (today).
• Robinhood cutting about 9% of full-time employees

So the momentum here for BigTech is entering a pretty significant bear-market that could take the entire market further down, easily another 10-15% in my opinion. Some panic selling could occur.

We knew earnings would slow down, but even FANG can’t fight the Fed.

• Meta is down 46% YTD
• Netflix is down 67% YTD
• Microsoft is down 19% YTD
• Google is down 18% YTD (another 5% in after hours trading so far)
• Amazon is down 18% YTD
• Apple is down 14% YTD

Even Elon Musk Can’t Fight the Fed

If BigTech continues this downward momentum, it will literally take the entire stock market with it.

The poor earnings from Google seems to indicate this is highly likely to be the case. One of the only major stocks that has yet to reach correction territory or anywhere near is it Tesla $TSLA.

• However, today Tesla was down 12%.

I expect this trend to accelerate as rate-hike pressure really dawn on the markets with a prolonged period of inflation, stagflation and recession fears especially triggered by China and Europe.

With the likes of Robinhood cutting jobs and GM struggling, it’s not looking good. General Motors profit dips in the first quarter amid rising costs and supply chain issues. The impact of higher costs should continue to push down on Earnings moving forwards.

At their peak, BigTech were even a value-trap for many investors. This is what happens when markets are too centralized. Meta and Netflix falling off a cliff might even indicate BigTech is not the best place to be for the next decade of investing. We’ve become too used to them being the only place.

Of the BigTeck stocks my view is that Microsoft is the most diversified. Their growth in Gaming, cybersecurity and Ads really is the right mix.

CEO Satya Nadella said in January that security generates $15 billion a year in revenue, up from $10 billion a year earlier. Nvidia is also a BigTech stock now, and if it gets low enough, it becomes more appealing. It needs to go down below $130 to look more realistic in these markets.

Retail brokerage firm Robinhood is cutting back staffing levels, citing “duplicate roles and job functions” after rapid expansion last year. A lot of those pandemic beneficiaries are getting killed. The bubble was real after all. A lot of you guys didn’t believe me.

The pain you will see in Tesla’s stock will shock you. No stock or asset is an island unto itself, not even Tesla or Bitcoin, propped up by Billionaires.

Google Earnings

Wall Street is also watching other key numbers in the Alphabet report:

• YouTube advertising revenue:?$6.87 billion expected vs. $7.51 billion expected, according to StreetAccount
• Google Cloud revenue:??$5.82 billion vs. $5.76 billion expected, according to StreetAccount
• Traffic acquisition costs (TAC):?$11.99 billion vs. $11.69 billion expected, according to StreetAccount
• Earnings per share (EPS):?$24.62 per share, vs. $25.91 expected, according to Refinitiv

This is a bad sign for BigTech Earnings week in late April, 2022.

Buying Amazon, Google or Tesla at these levels before their stock splits go live, would be suicidal.

Google’s earnings came in lower-than-expected as costs mounted, and growth in the tech behemoth's YouTube business slowed sharply compared to last year. It wasn’t even a terrible call, but sentiment is really hurting this week. The stock is down 6% now after hours, that’s big.

Okay guys, we’ll I just wanted to paint a picture for you. The correction for BigTech and Tesla, is just getting started.

Google Cloud is Growing Well

• For the first quarter, Google advertising revenue grew about 22% to reach $54.66 billion, topping consensus expectations for $54.12 billion. However, YouTube advertising revenue grew just 14% to reach $6.87 billion.
• Alphabet has been expanding its efforts in the cloud to offset slowing growth elsewhere. Google Cloud, while still smaller than incumbents like Amazon Web Services and Microsoft Azure, has been growing quickly, but still remains unprofitable. The unit grew sales 43% for the first quarter to reach $5.8 billion, which was about in-line with expectations.

Big Tech and other once high-flying growth stocks have been pressured so far this year amid prospects of higher interest rates from the Federal Reserve, which would raise borrowing costs and weigh on the valuations of those companies. Some analysts believe this won’t be a good decade for BigTech, and certainly not as good as the last decade since 2009.

BigTech and Tesla are the last to fall, even as the rest of the market has seen a major correction period. The problem is these stocks are so big that they drag down the entire market and investor sentiment with it. That could even spill into Bitcoin’s sentiment as well.

I’ll be watching Earnings more this week, so stay tuned for more coverage.

If you want to follow my insights on stocks, investing and stock trading including buy alerts and so forth, you can do so?here.

https://stockquest.substack.com/subscribe