Wall Street closed unchanged on Thursday, with the S&P 500 hitting another record, as investors weighed better-than-expected corporate earnings. After the closing bell, shares of Amazon and Pandora tumbled on quarterly results, while Facebook stock continued to edge higher after soaring to an all-time high.
The Dow Jones Industrial Average fell 2.83 points or 0.02 percent, to close at 17,083.80. The S&P 500 edged up 0.97 points or 0.05 percent, to end at 1,987.98. The Nasdaq Composite fell 1.59 points or 0.04 percent, to finish at 4,472.11.
Amazon Shares Plunge Over 10 Percent as Q2 Earnings Miss
Amazon.com, Inc. (NASDAQ:AMZN) shares dropped over 10 percent in extended-hours trading Thursday after the company reported a fiscal 2014 second-quarter earnings loss of 27 cents a share on sales of $19.34 billion, compared to a net loss of 2 cents per share on sales of $15.7 billion in the year-ago period.
Although sales came in line with forecasts, Wall Street had expected Amazon to report a loss of 15 cents a share, according to analysts polled by Reuters.
“Amazon is not going to turn a profit. We already know that,” Keith Bliss, senior vice president and director of sales & marketing at Cuttone & Co., Inc. told IBTimes ahead of Amazon’s earnings announcement. “The metric that everybody looks for is their year-on-year revenue growth.”
Amazon reported its net sales grew 23 percent during the second-quarter from a year earlier.
The company's net loss during the quarter ended June 30 was $126 million, compared with net loss of $7 million in second-quarter of 2013.
“We continue working hard on making the Amazon customer experience better and better,” Jeff Bezos, founder and chief executive officer of Amazon.com, said in the company’s second-quarter earnings report.
Amazon said it expects to post net sales of between $19.7 billion and $21.5 billion in the third-quarter, versus estimates for $20.83 billion. The online retail giant added it forecasts an operating loss in the current quarter to be between $810 million and $410 million, compared to $25 million in third-quarter of 2013.
Shares of Amazon plunged 10.07 percent to $322.50 on Thursday in after-hours trading.
Facebook Stock Hits Record Highs on Strong Mobile Ad Growth
After the closing bell on Wednesday, Facebook reported fiscal 2014 second-quarter earnings of 42 cents per share, excluding items, on revenue of $2.91 billion. Analysts had expected the company to issue second-quarter EPS of 32 cents on revenue of $2.8 billion, according to Reuters.
The company saw a surge in mobile advertising growth and said nearly 62 percent of its ad revenue now comes from mobile. Facebook previously earned a profit of 19 cents a share on revenue of $1.8 billion in the year-ago period.
“It’s hitting an all-time high today, and it’s probably a good time to jump in [to buy]. Their valuations are getting a little stretched by traditional metrics, but if they continue to show this type of growth, not only here in the U.S. but also globally, then there’s no reason why they can’t go ahead and perform against those outsized valuations, both on a sales and a P/E number,” Bliss said.
The social media network said revenue from advertising was $2.68 billion, a 67 percent increase from the same quarter last year. Meanwhile, mobile advertising revenue came in at nearly $1.66 billion, or 62 percent of ad revenue, compared to approximately $660 million, or 41 percent of ad revenue in the second-quarter of 2013.
“Their [Facebook] P/E on forward looking earnings is much less than Twitter, so they seem to be a good value for the money,” Bliss added.
Facebook said mobile active users rose 31 percent to 1.07 billion during the second-quarter from the same period in 2013.
“The other thing to keep in mind with digital is mobile ad revenue in the country will be close to 60 billion dollars just in the U.S. in the next four years,” Bliss added. “Facebook is starting to capitalize on that, as are other social media outlets.”
Shares of Facebook edged up 0.20 percent $75.13 on Thursday extended-hours trading.
Pandora Shares Plunge on Wider Than Expected Q2 Loss
Pandora Media Inc. (NYSE:P) tumbled more than 12 percent in extended-hours trading after the company reported a fiscal 2014 second-quarter loss of 6 cents per share on revenue of $219 million, compared to a loss of 4 cents per share on revenue of $153 million a year earlier.
Although the online streaming music service saw a 38 percent jump in quarterly revenue, shares plunged after the company said its net loss widened to $11.73 million in the quarter ended June 30, from $6.9 million a year ago.
Pandora's advertising revenue increased 39 percent year-over-year to $177.3 million and subscription revenue increased 35 percent to $41.6 million from the same period in 2013.
The company said total mobile revenue for the quarter was $167.5 million, growing 59 percent year-over-year.
“Our better than expected second quarter results demonstrate success and continued business acceleration as a result of our investments in mobile and local advertising. Mobile advertising reached a record 76 percent of total ad revenue and local grew at 144 percent year-over-year,” Brian McAndrews, chairman, president and CEO of Pandora, said in Pandora's earnings statement.
For the current quarter, the company expects EPS between 5 and 8 cents on revenue between $235 million to $240 million, compared with Wall Street expectations for the company to issue a profit of 8 cents per share on revenue of $234.6 million, according to Reuters.
Pandora's revenue for 2014 is estimated to be in the range of $895 million to $915 million, up from prior full-year guidance of $880 million to $900 million.
Shares of Pandora Media fell 10.48 percent to $25.71 on Thursday in extended-hours trading.