3 High-Impact Tech Earnings: Tesla, Fitbit and Square

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Today, I'd like to take a look at three stocks - Tesla Inc (NASDAQ: TSLA ), Fitbit Inc (NYSE: FIT ) and Square Inc (NYSE: SQ ) - that caused the biggest reactions this week.

Source: FamZoo Staff via Flickr (Modified)

It's fun to dig into quarterly numbers, but it's equally fun watching investors react to those very numbers and sometimes exaggerate even the slightest deviation from the models.

So much hope is already leveraged in every tick on these charts that a penny can create or destroy billions in market cap - and when many high-multiple names report simultaneously, the fireworks get intense.

This week, the fireworks were intense.

High-Impact Tech Earnings: Tesla Inc (TSLA)

The New Star of Tesla Inc (TSLA)? Model Y (Says Morgan Stanley)

Tesla probably has the biggest cult on Wall Street right now, producing just 83,000 cars a year to justify a $45 billion valuation.

The key, as always, is growth: According to Elon Musk's conference call last night, the assembly line should accelerate 500% this year and then double again in 2018. News that sales last quarter ramped up 30% year-over-year supports the still-hypothetical timeline and it even brings it incrementally closer.

Beyond that all-important ramp, TSLA is still bleeding cash, which is far from surprising. While the burn rate is narrowing, Musk is still going to be burning capital for at least another year.

Until then, the market feels comfortable moving Tesla Inc shares around at roughly 4.4x trailing sales - and this quarter at least, Musk gave us a reason to keep cheering in the long-term.

High-Impact Tech Earnings: Fitbit Inc (FIT)

Fitbit Inc (FIT) Stock Isn't As Dangerous As It Looks
Via Fitbit

Fitbit, on the other hand, may be bouncing now, but the fallen star is still staring down the gun of declining sales and it has little concrete comfort to give investors wondering whether to hang around a few years for the product mix to turn around.

That may never happen. FIT sales in the key holiday quarter came in a little below Wall Street's already heavily discounted forecasts. A few months ago, the bulls were counting on this quarter to bring year-over-year growth back, but it's clear that just didn't happen.

Now that the final numbers are on the table, sales actually declined nearly 20% from last year, which pushes the recovery window back to 2019, if not beyond. That's a long time to run at a loss, and in the meantime, Fitbit Inc's research and development investment lags entrenched would-be competitors who want the wearable computing market for themselves.

High-Impact Tech Earnings: Square Inc (SQ)

High-Impact Tech Earnings: Square Inc (SQ)
Via Square

Square showed us the biggest fireworks. The stock was geared for 20% top-line growth, while Wall Street wanted confirmation that revenue would clear $2 billion across the current year in order to keep that growth ramp - and we got it.

What has earned the company a standing ovation is management's success when it comes to reducing the quarterly cash burn. SQ should actually break even on an adjusted basis in its next earnings report and earn as much as $0.19 a share for all of 2017 once all the "adjustments" are made.

If so, we're a lot closer to GAAP profitability than many people thought. Inflection points like that do great things to stock valuations, which is why people are piling in on Square Inc now while they can.

Hilary Kramer is the editor of GameChangers , Breakout Stocks Under $10 , High Octane Trader , Absolute Capital Return and Value Authority . She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.

The post 3 High-Impact Tech Earnings: Tesla, Fitbit and Square appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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