The Justice Department could file its long-rumored antitrust lawsuit against Apple Inc. as soon as Thursday, according to a report late Wednesday.
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Shares of Okta (OKTA 1.11%) surged out of the gate Thursday morning, gaining as much as 28.4%. As of 11:30 a.m. ET, the stock was still up 20.8%.
The catalyst that sent the cybersecurity specialist soaring was its quarterly earnings results, which suggested the company may finally be on the path to recovery.
Beat and raise
For its fiscal 2024 fourth quarter (ended Jan. 31), Okta generated revenue of $605 million, up 19% year over year, fueled by subscription revenue of $591 million, which grew 20%. The company’s focus on costs boosted its bottom line, as adjusted earnings per share (EPS) of $0.68 more than doubled.
To give the results some context, analysts’ consensus estimates were calling for revenue of $587 million and EPS of $0.51, so Okta sailed past expectations with plenty of room to spare.
Okta’s robust cash generation continued, with operating cash flow of $174 million, up 129% year over year, while free cash flow of $166 million surged 131%.
The company’s customer metrics also improved, with total customers of 18,950, up 8% year over year. Okta’s most lucrative customers — those spending $100,000 annually — grew even faster, climbing 14%. The company’s trailing-12-month dollar-based net retention rate clocked in at 11%, which shows existing customers are expanding their relationships.
Okta’s remaining performance obligation (RPO) — or contractually obligated sales not yet booked into revenue — is on the upswing. Current RPO of $1.95 billion increased 16% year over year, while its total RPO of $3.39 billion increased 13%. This marked an acceleration compared to Q3. Since RPO is a forward-looking indicator, it suggests Okta’s sales have begun to reaccelerate.
A stark recovery
For the second quarter, the company is expecting revenue of about $604 million, up roughly 16% at the midpoint of its guidance, while guiding for full-year revenue of $2.5 billion. Both forecasts exceeded Wall Street’s expectations of $585 million and $2.48 billion, respectively — and investors let out a collective sigh of relief.
The economic headwinds and self-inflicted wounds Okta suffered appear to be in the rearview mirror. With the strides the company has made, it might finally be time to buy Okta stock again.
Shares of NextEra Energy (NEE 1.91%) rose 4.1% in early morning trading on Thursday after the utility and renewable energy company exceeded its own adjusted earnings-per-share (EPS) estimates for 2023. NextEra Energy now says it is well positioned for 2024 and expects to hit the top end of its adjusted EPS guidance through 2026.
Strong earnings growth despite challenges
NextEra Energy earned adjusted EPS of $3.17 a share in 2023, which was up 9% from 2022 and surpassed management’s expectations despite a challenging business environment. Key challenges included rising interest rates, higher inflation, and supply issues, particularly in solar.
Both of NextEra Energy’s businesses — Florida Power & Light (FPL), which is also the largest electric utility in America, and renewable energy arm NextEra Energy Resources — grew strongly in the fourth quarter and 2023. Driven by spending worth nearly $9.4 billion on its infrastructure, FPL’s earnings surged 20% last year. In Q4, FPL’s average customer base increased by 81,000 year over year.
NextEra Energy Resources’ EPS shot up to $1.75 per share in 2023 from only $0.14 a share in 2022. 2023 was a record year, with NextEra Energy Resources adding nearly 9 gigawatts of new renewables and battery storage projects to its backlog.
NextEra Energy stock is an attractive buy
On its fourth-quarter earnings conference call today, NextEra Energy’s management acknowledged the stock’s poor performance of late and said it remains focused on “execution and creating long-term value for shareholders.” The company has already outlined financial goals through 2026. This year, for example, it expects to grow its adjusted EPS by 2% to 8%. For 2025 and 2026, it foresees 6% to 8% growth off its 2024 adjusted EPS range.
Above all, NextEra Energy is confident it will grow its dividend by at least 10% this year. A roughly 10% dividend raise from a stock that is yielding 3.3% and is still down about 32% in one year sounds enticing and explains why the stock rose today.
Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool has a disclosure policy.
Speaking on CNBC’s ETF Edge on Jan. 9, VanEck’s CEO, Jan van Eck, said he expects the spot Bitcoin ETFs to start trading on Thursday, Jan. 11.
Additionally, Steven McClurg, the Chief Investment Officer for Valkyrie, one of the other applicants in the race, told Fortune this week that he also believes Thursday will be the launch day. He said
“We’re just in a slight holding pattern. I’m in the camp where I believe that sometime after the market closes on Wednesday, the ETFs will go effective, meaning they trade on Thursday.”
Cathie Wood from Ark Invest also told ETF Edge that the recent ETF application process was “unlike previous filings” as the SEC had asked questions of the would-be issuers instead of simply rejecting applications. She went on to say the process had been very “detailed” and “technical,” indicating that there had been much more disclosure and exploration than previous ETF attempts.
Lastly, Wood stated that,
“This told us they were getting ready. Now, can we be 100% sure there will be approval this week? No, you never say 100%, but we’re feeling really good about it.”
Following a spat of filings to the SEC on Jan. 8 and today, Jan. 9, all signs now appear to point toward approval this week. Bitcoin is up 14% since its Jan. 3 low, trading at just below $47,000 as of press time.
In a related update, Grayscale’s Chief Legal Officer posted to social media that he was “dotting some i’s and crossing some t’s.”
In response to fears that the applications could be denied at the eleventh hour, Bloomberg’s Eric Balchunas commented.
“The idea that Gary would make his Staff work countless hours with 11(!) dif issuers on two dozen massive documents each well over 100 pages long full of technical jargon through the holidays just to give him cover to deny is tin foil hat stuff in my opinion. But look, we still have 5% chance of delay/denial.”
As more final S1 filings come through, Bitwise has dropped its fee to just 0.2%, making the race to the bottom closer than ever. Only Blackrcok has a comparative fee, but it is capping this rate at the first $5 billion into the fund. Even more astoundingly, Bitwise is waiving its fee entirely for the first $1 billion.
Update: Added Bitwise fee.
Shares of Apple Inc. dropped Monday, after the Wall Street Journal reported the technology giant would halt some Apple Watch sales in a preemptive move to comply with a U.S. import ban regarding the use of blood-oxygen sensors.
The company
AAPL,
confirmed to CNN it will no longer be selling its Apple Watch Series 9 and Apple Watch Ultra 2, starting Thursday on Apple.com and from retail locations after Dec. 24.
“While the review period will not end until December 25, Apple is preemptively taking steps to comply should the ruling stand,” the company said in a statement, according to the report. “Apple strongly disagrees with the order and is pursuing a range of legal and technical options to ensure that Apple Watch is available to customers.”
If the order stands, Apple said it will “continue to take all measures to return Apple Watch Series 9 and Apple Watch Ultra 2 to customers in the U.S. as soon as possible.”
The ban, which would include the Apple Watch Series 9 and Apple Watch Ultra 2, comes after the U.S. International Trade Commission found that Apple violated patents in most new models of its smartwatches since 2020, the WSJ report said.
Apple’s stock fell 0.85% in trading Monday, to buck the rallies in the technology sector
XLK
and the broader stock market.
SPX
The stock’s decline snapped a seven-week win streak in which it has soared 17.4%, and included a record close of $198.11 on Dec. 14.
Apple said it believes the ITC’s findings are inaccurate and should be reversed. It said it plans to take the decision to the Federal Circuit.
The commission had found in October that Apple violated medical-technology company Masimo Corp.’s
MASI,
patents related to measuring blood-oxygen levels. That led the commission to issue an order to ban the import of certain Apple Watches.
The Biden administration has 60 days to overrule the Trade Commission’s order.
Masimo shares rallied 5.5% in afternoon trading Monday.
While Apple didn’t provide data on Apple Watch sales in its latest earnings report, it did say wearables, home and accessories revenue came in at $9.3 billion during the fiscal fourth-quarter ended Sept. 30.
The device, which initially struggled to gain an identity of its own in a product line bejeweled with iPhone, iPad and Mac products, is now among Apple’s hottest-selling products. Its growing popularity in great measure is as a safe, easy-to-monitor proxy for iPhone. As a result, Apple is pushing its nearly decade-old product as never before.
Read more: The Apple Watch may now be a back-to-school necessity
Apple’s stock, which has eased 1% since closing at a record $198.11 on Dec. 14, has run up 50.8% year to date while the Nasdaq Composite
COMP,
has rallied 42.4% and the Dow Jones Industrial Average
DJIA,
has gained 12.6%.
Shares of MaxCyte (NASDAQ: MXCT) were down more than 21% as of noon on Thursday after the company announced preliminary third-quarter results. So far this year, the healthcare stock is down more than 53%.
Maryland-based MaxCyte focuses on cell-engineering platform technology to serve the biotech industry. In its preliminary report, the cell engineering company lowered its full-year guidance and relayed that it expected lower revenue for the third quarter. That spooked investors, and the stock hit a 52-week low on Thursday morning of $2.53.
The company said it expected third-quarter revenue between $7.8 million and $8 million, down 25% to 27% year over year (YOY). The company cited reduced customer demand for the drop. While strategic partnership license program-related revenue grew to $1.4 million, up from $800,000 in the same period last year, the company says it expects core business revenue was expected to fall 33% to 35% to be between $6.4 million and $6.6 million.
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Shares of Apple continued their post-earnings plunge on Monday, falling 1.7% despite a rebound in the broader market. The tech giant has now lost over $200 billion in market cap in less than a week, its worst five-day session since November 2022.
On the one hand, Apple’s size makes even a slight decline in its share price look pretty significant in terms of market cap, but on the other hand, the recent drop has been large by historical standards. Here’s why the market got so (relatively) spooked about Apple.
Falling revenues
The turbulence began on Aug. 3 when Apple reported that its iPhone sales had fallen well short of Wall Street’s estimates for the June quarter, leading to the company’s overall revenues dropping 1% year-over-year to $81.8 billion.
While Apple has grown its services segment revenues in recent years—adding billions to its top line from the App Store, iCloud services, as well as Apple Music, Apple TV+, and Apple Pay—iPhone sales still account for roughly 50% of total revenue. As a result of this reliance, the iPhone sales drop led to a wave of analyst downgrades for Apple’s stock last week.
Rosenblatt analysts downgraded Apple’s shares to “neutral” from “buy,” arguing the company is stuck in a “slowdown phase.” And Loop Capital analyst Ananda Baruah lowered his rating to “hold” from “buy” as well, noting that Apple’s current revenue guidance is at risk if iPhone sales don’t rise throughout the year.
It was a tough quarter for Apple’s hardware sales business overall. IPhone revenues fell 2.4% year-over-year to $39.7 billion, Mac revenues sank 7.3% to $6.8 billion, and iPad revenue plummeted 19.8% to $5.8 billion.
Weak guidance
Another reason for the recent sell-off in Apple stock was weaker-than-expected guidance from management.
For the September quarter, Apple said it expects gross profit margins to be between 44% and 45%, with flat to slightly slower year-over-year revenue growth. And while iPhone and services segment revenue may accelerate slightly, Apple CFO Luca Maestri said he expects revenue for the Mac and iPad to continue falling throughout the year.
Wedbush tech analyst Dan Ives, a noted Apple bull, admitted in an Aug. 3 note to clients the guidance was “a tad light of the Street.” And Bank of America analysts, in a similar post-earnings note, said the outlook showed Apple is facing a “backdrop of a weak U.S. smartphone market.”
A lofty valuation
Apple’s rich valuation is the third key reason that the stock is under pressure, according to analysts.
Despite three consecutive quarters of falling revenue, shares of Apple were up 51% year-to-date at their peak, leading its shares to trade as high as 33x times earnings. And even after the recent post-earnings stock price drop, Apple still trades at roughly 30 times earnings. For comparison, the S&P 500 trades at roughly 20 times earnings, per WSJ data.
Some analysts point to Apple’s cost cutting measures and growing high-margin services revenue as a reason to pay a premium for the stock, noting that overall net income rose 2.3% to $19.9 billion in the June quarter and services revenue jumped 8% to a record high $21.2 billion. But others argue that Apple remains overly reliant on waning iPhone sales in a difficult macroeconomic environment.
Still a long-term winner?
Apple’s latest quarter was enough to spook investors, but Wall Street analysts’ reaction was split, with many big names remaining upbeat about the tech giant’s long-term prospects despite the recent headwinds.
While investors fear that falling iPhone sales are an indication of waning demand for Apple’s most important product, bullish analysts note that, on a constant currency basis, revenues for the iPhone segment actually rose 1.4% year-over-year last quarter.
Wedbush tech analyst Dan Ives explained that iPhone revenues would have beat the Street’s consensus forecast excluding the foreign currency exchange headwinds and argued that strength in key overseas markets for the smartphone offers a runway for future growth.
China iPhone revenues, for example, rose 8% year-over-year in the second quarter and management told investors on a post-earnings call that India iPhone revenues hit a record high, although they declined to disclose the exact figures.
Ives also believes that the release of iPhone 15 in September will create a “mini super cycle” of demand for the product at a time when Apple continues to increase its services segment revenues.
“We believe iPhones and Services should be stronger than expected and remain the core of the Cupertino growth story,” he wrote, reiterating his “outperform rating” and a $220 price target.
That view was backed up by Bank of America analyst Wamsi Mohan in an August 3 note. Mohan said that he believes Apple’s services business revenue can continue to grow due to “improving trends in advertising, mobile gaming and App store sales.” He also highlighted the record number of “switchers”—consumers who opted to switch to an iPhone from another brand—in China in the second quarter, arguing it could help to offset a “weaker consumer spending environment” globally.
While most analysts remain bullish about Apple’s long-term prospects, there are some who worry that there could be more near-term pain due to the company’s lofty valuation and falling revenues.
UBS analyst David Vogt noted that despite “disappointing” hardware sales, Apple currently trades at a roughly 50% premium to the S&P 500. And he said that although some of his peers are brushing off declining iPhone, Mac and iPad sales as “transitory” and pointing to the potential for growth in the services segment, he’s worried about underlying demand.
“The gravity of a challenging smartphone market particularly in developed regions that should continue…is a headwind for the stock,” he wrote, reiterating his “neutral” rating and $190 12-month price target.
This story was originally featured on Fortune.com
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What happened
Shares of Fastly (FSLY 24.25%) jumped on Thursday, rising about 17% as of 10:10 a.m. ET. Optimism for the stock grew following the edge computing company’s better-than-expected second-quarter results, which featured revenue ahead of both management’s guidance range and the consensus analyst forecast for the key metric.
Additionally, the tech company’s loss per share narrowed significantly compared to the year-ago quarter as its improved operational discipline continues paying off.
So what
Digging into the details, Fastly’s top-line growth accelerated, rising 20% year over year — up from 15% growth in Q1. Revenue for the period was approximately $123 million, beating analysts’ average forecast for about $119 million. Meanwhile, Fastly’s loss per share improved, narrowing from $0.14 in the year-ago quarter to $0.08. Similarly, Fastly’s quarterly adjusted loss per share narrowed from $0.23 to $0.04 over the same period. The consensus forecast was for an adjusted loss per share of $0.10.
Fastly CEO Todd Nightingale, who took on the leadership position last fall, cited strategic initiatives to improve its go-to-market strategy, operational rigor, and cost control as key factors driving the performance.
Helping revenue growth in particular was the company’s 3% sequential growth in average enterprise customer spend and the addition of 11 new enterprise customers. Its impressive 123% dollar-based net expansion rate (a measurement of growth in spend from existing customers) was up from 121% in the first quarter of 2023.
Now what
Likely serving as another reason for the stock’s big gain on Thursday, Fastly raised its full-year revenue outlook. Management said it now expects 2023 revenue to be between $500 million and $510 million. Analysts on average were expecting full-year revenue of $501.8 million — a figure that fell in the upper half of management’s previous guidance range for revenue between $495 million and $505 million.
Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool has positions in and recommends Fastly. The Motley Fool has a disclosure policy.