By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets
With the new season ahead, investors’ fears are fading out. The market is trying to find its bottom and bounce off it, if somewhat timidly. Few investors were bold enough to get into risks before the New Year, most preferred to lock in their hard-earned profits, which subsequently led to the overall downtrend.
There were some other reasons, too, though. The quarterly reports went better and better, which first was a good signal for keeping stocks within the portfolios. However, in Q4 2018, some companies were barely able to meet expectations, while others set their expectations way lower for the future periods. Facebook, for instance, was unable to meet expectations for two times in a row, despite the profits hitting the record highs. Meanwhile, Apple met expectations, but iPhone sales went significantly lower in Q4. General Motors revenues were completely based on automobile prices, while sales plunging, too. Some of these issues are due to the Sino-US trade war, but even without it the market would have gone down anyway, if at some higher price levels. Every company has its limit, and once it’s reached, a correction is inevitable. On the other hand, every company makes progress through innovative ideas, and when it manages to create a new unique product or service, its price goes drastically up.
Speaking of Facebook, Zuckerberg’s company multiplied its revenues more than threefold, from $4B in 2015, to $14B. Alphabet, the parent company of Google, succeeded in growing its revenues from $18B to $34B. Apple earnings are not growing as fast as Google’s, being very choppy, and it looks like the tech giant hit its iPhone sales limit. In 2015, Apple earned $58B, and had only 13% more by late 2018.