7/23 Daily Plan: Prelim Thoughts on GOOG and TSLA earnings
Hey Folks,
Ahead of Google and Tesla earnings this week, both stocks saw a modest lift on Monday’s rally and entered Tuesday (today’s) earnings release date with Google trading slightly above my Base Case and Tesla trading at my Bull Case.
I do a lot of stress testing when it comes to my Bear/Base/Bull cases so this post-earnings release reaction is a reasonable reaction.
Stocks that trade near the Bull Case are more vulnerable. It doesn’t mean they will instantly reject at that level but expectations are higher (and therefore, so is the risk).
Stocks that trade at Base Case should be buyable. Stocks that trade at Bear Case are hugely buyable, in my view.
I need to wait for analyst estimates to come in for the 2025-2028 fiscal years on Revenue, EBITDA, Margins, among other important key info before updating my scenarios on Google and Tesla.
Preliminarily though, I think any weakness in Google will be bought up. For now, I’m thinking that a revisit to 170-175 would be the first area I would look at. This is because their margins continue to expand and they continue beat revenue estimates (which were already high). If the stock was trading at 170-175 ahead of earnings, I think the stock would have rallied to 180-185.
Location of the stock ahead of earnings influences how it is likely to respond afterwards.
On Tesla, because of its run up ahead in past few weeks leading up to earnings, I think investors will need to be patient as margins are expected to recover more slowly than hoped. Margins are one of the most important variables sell side analysts use to discount cash flows of a company’s future value. For now, I do not yet have an entry suggestion on Tesla.
I will have updated Bear/Base/Bull cases on Google & Tesla by the end of the week.
In the background, I will study Texas Instruments (TXN) and do a DCF Conclusion Study on this name to understand its impact on the SOXX ETF and the broader tech index QQQ ETF/NQ. I will release once ready.
Bottom Line: We could expect a bit of softness in tech tomorrow, but based on tonight’s earnings from Google and Tesla, any selloff is likely to be measured/contained given that Google’s results do not portend a significant slowdown in the economy. If Google’s selloff deepens tomorrow, then that will be a different story. I’m not as worried about Tesla’s impact on the QQQ ETF.
Based on my understanding, Google and Meta’s operating results have more intermediate-term influence on the S&P 500 and Nasdaq-100 than Tesla’s results.
Make sure to subscribe and stay tuned for more research/strategy as earnings season progresses.
-Larry
Important Links (Organized DCF Conclusion Studies By Indices)
Semiconductor SOXX ETF Top Stocks DCF Conclusion Studies (Newly Added - will add the other SOXX names in here shortly): https://larrycheung.substack.com/t/soxx-etf-top-10-dcfs
DOW Top Stocks DCF Conclusion Studies:
https://larrycheung.substack.com/t/dow-etf-top-10-dcfs
QQQ ETF Top Stocks DCF Conclusion Studies: https://larrycheung.substack.com/t/qqq-etf-top-10-dcfs
SPY ETF Top Stocks DCF Conclusion Studies: https://larrycheung.substack.com/t/spy-etf-top-10-dcfs
Conclusion Table on Dow and QQQ ETF Stocks
Link to DCF Full Archive: https://larrycheung.substack.com/t/dcf-modeling-fundamental-analysis
Link to Educational Guides: https://larrycheung.substack.com/t/educational-guides
Q&A: Why I focus on NQ as a primary market.
My focus: I now focus about 95% of my attention on price action when it comes to the indices. I would strongly encourage spending lots of “screen time” for folks who want to navigate the market.
Note: I publish Monday-Thursday. These are my opinions based on my own research and my model may or may not aligned to the market’s thinking. I have to repeat this in all my notes as there is an element of the unknown in today’s strange macro environment.
Disclaimer: My investment community is not investment, financial, or trading advice, but for educational informational purposes only. I am happy to share my personal opinions which I provide as my personal journal. Trading of any kind of securities involves a lot of risk. No guarantee of any profit whatsoever is made. Investors may lose everything they have. Practice extreme caution. No profit is guaranteed whatsoever, You assume the entire cost and risk of any trading or investing activities you choose to undertake. You are solely responsible for making your own investment decisions. Owners/authors of this publication are NOT registered as securities broker-dealers or investment advisors either with the U.S. SEC, CFTC or with any other securities/regulatory authority. Make sure to consult with a registered investment advisor, broker-dealer, and/or financial advisor.