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Apple, Exxon, Chevron and GE all have this one thing in common

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Dow stocks Apple, Exxon Mobil, Chevron and General Electric are trading well above their 50-day moving averages. They have something else in common — one technician sees more upside for each.

“There’s a misperception out there that because a stock is overbought that that is bad,” Craig Johnson, chief market technician at Piper Jaffray, told CNBC’s “Trading Nation” on Friday.

Apple, the world’s largest company by market cap, is trading nearly 8 percent above its 50-day moving average, but Johnson says it’s set to continue its move higher.

“Apple’s already gone through a corrective move,” he said. It “doesn’t look like a stock that I want to be taking profits in. I think there’s probably more upside to go in that name.”

Apple shares traded in the red in March and April before exploding higher on positive earnings in May. Its shares are now more than 11 percent higher for the year.

Like Johnson, Michael Binger of Gradient Investments sees more room to run for Exxon Mobil and Chevron.

“There’s nothing like $70-$80 oil to really help these names like Exxon and Chevron,” Gradient’s senior portfolio manager said on Friday’s “Trading Nation.” “There’s no way we’re selling them right now. Their cash flow profiles are getting better.”

One stock on which Johnson and Binger disagree is General Electric. Where Johnson forecasts a “short-term bottom,” Binger sees a fundamental picture that points to further hardship.

“We’d prefer to stay on the sidelines of General Electric,” said Binger. “This recent move is more of a dead-cat bounce. I have no idea what their business model is going to look like going forward. I have a lot of doubt about their earnings power.”

GE is on track to close May with its second month of gains, though it remains lower for the year. Shares of the oldest Dow component rallied 3 percent on Monday after the industrial giant said it would merge its transportation business with Wabtec in a deal worth $11 billion. Still, the stock is 47 percent below its 52-week high, placing it firmly in bear-market territory.

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Apple (AAPL) earnings Q4 2020

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Apple reported fourth-quarter earnings on Thursday that slightly exceeded Wall Street expectations, but the company did not offer investors any guidance for the quarter ending in December. iPhone sales were down more than 20% year-over-year.

Here’s how Apple did versus analyst expectations via Refinitiv estimates:

  • EPS: 73 cents vs 70 cents estimated
  • Revenue: $64.7 billion vs $63.70 billion estimated, up 1% year-over-year
  • iPhone revenue: $26.44 billion vs. $27.93 billion estimated, down 20.7% year-over-year
  • Services revenue: $14.55 billion vs. $14.08 billion estimated, up 16.3% year-over-year
  • Other Products revenue: $7.88 billion vs. $7.40 billion estimated, up 20.9% year-over-year
  • Mac revenue: $9.0 billion vs. $7.93 billion estimated, up 28% year-over-year
  • iPad revenue: $6.8 billion vs. $6.12 billion estimated, up 46% year-over-year
  • Gross margin: 38.2% vs. 38.1% estimated

The lack of fiscal first-quarter 2021 guidance from Apple means that investors and analysts don’t get a hint at how Apple is projecting the sales performance of the iPhone 12, which went on sale in October. 

Apple stock dropped over 4% in extended trading.

“If you look at the case count, the case counts are climbing in Western Europe. They’re climbing in the United States. And so there’s still a sufficient level of uncertainty out there… we don’t believe that’s an environment to guide into,” Apple CEO Tim Cook told CNBC’s Josh Lipton. 

Apple hasn’t offered guidance for the past two quarters because of uncertainty related to the Covid-19 pandemic. 

However, Cook said that he was optimistic about iPhone 12 sales for a number of reasons, including 5G support, carrier promotions, and a loyal install base, and said that “initial data points are really quite good.”

Sales in China were a weak point for Apple. Sales in greater China, which includes Hong Kong and Taiwan, dropped to $7.95 billion from $11.13 billion a year before, over a 28% decrease.

“A larger percentage of China revenue is made up of new iPhones. And so that’s the reason the number for the total quarter started with a minus sign. But given what we see in the early going with the new iPhones, we’re confident we’ll grow in Q1,” Cook told CNBC.

iPhone revenue was down over 20% from the same quarter last year and came up short against Wall street expectations. However, many investors and analysts are more focused on how the iPhone 12 will sell in the coming year. Apple’s iPhones went on sale this year in October, and more models are planned for next month, meaning that sales from the new devices aren’t counted in this quarter.

Cook also said that Apple wasn’t concerned about concerns that the iPhone 12, which is 5G-enabled, is outpacing the construction of 5G networks. “There are obvious places in the world where it’s more ahead than in others,” Cook said. “But we feel like we are entering sort of at exactly the right time.”

Revenue for Macs and iPads both exceeded analyst expectations, most likely driven by strong work-from-home trends during the pandemic. Apple drew attention to strong results in those categories last quarter, too. Overall, Mac revenue was up 28% year-over-year and iPad revenue rose 46% from the same quarter last year. 

Cook hinted at future product launches in 2020, likely Mac computers that use Apple-designed chips. “Without giving away too much, I can tell you that this year has a few more exciting things in store,” Cook said.

Apple released new Apple Watch Series 6 models that went on sale in September. The category that those devices are counted in for sales is called Wearables, Home, and Accessories, which came in slightly higher than expectations. The category also includes sales from headphones such as AirPods and Beats. Sales for the category were up over 20% on a year-over-year basis. 

Investors are always closely examining Apple’s services business, which includes subscriptions like iCloud and Apple Music, fees from the App Store paid by app developers, and licensing revenue. Services revenue exceeded Wall Street expectations and grew 16% over last year. 

On Friday, Apple will release bundles of its subscription services called Apple One, Cook told CNBC. The bundles vary by region but include Apple Music, iCloud storage, and Apple TV+ streaming video among other .

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SoftBank-backed GetYourGuide secures $133 million from investors

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GetYourGuide CEO Johannes Reck.

GetYourGuide

LONDON — SoftBank-backed activity booking app GetYourGuide has raised 114 million euros ($133 million) as it tries to look beyond the pandemic. Total investment in the company now stands at over $780 million, while its valuation of over $1 billion remains the same.

The Berlin start-up’s latest funding round, led by U.S. private equity firm Searchlight Capital, has been raised as a convertible note, which is a short-term debt that will turn into equity in a future financing round.

GetYourGuide CEO Johannes Reck told CNBC on Thursday that raising money through standard means would have been “impossible” for a travel company in the current climate.

“This form of financing reflects the fact that our investor base shares the belief that our long-term mission matters, and that leisure travel is a fundamental human need,” he said via email. “People will travel again, and when they do, experiences will be what they crave the most.”

Existing venture capital investors including SoftBank Vision Fund, Lakestar, Battery Ventures, and Highland Europe also participated in the funding round.

Reck said the money will give GetYourGuide, which competes with Airbnb and Viator, the flexibility to invest in marketing and getting its products ready for future travelers’ “preferences and standards.”

On the digital side, GetYourGuide said that means ensuring the platform suits travelers that are more spontaneous and are more likely to cancel. On the physical side, it means ensuring guides have had mandatory training, as well as providing free masks and sanitizers to customers.

Decimated travel industry

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U.S. GDP booms at 33.1% rate in Q3 report, beating expectations

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Coming off the worst quarter in history, the U.S. economy grew at its fastest pace ever in the third quarter as a nation battered by an unprecedented pandemic started to put itself back together, the Commerce Department reported Thursday.

Third-quarter gross domestic product, a measure of the total goods and services produced in the July-to-September period, expanded at a 33.1% annualized pace, according to the department’s initial estimate for the period.

The gain came after a 31.4% plunge in the second quarter and was better than the 32% estimate from economists surveyed by Dow Jones. The previous post-World War II record was the 16.7% burst in the first quarter of 1950.

Markets reacted positively to the news, with Wall Street opening flat to slightly positive.

Increased consumption along with sold gains in business and residential investment as well as exports fueled the third-quarter rebound. Decreases in government spending following the expiration of the CARES Act rescue funding subtracted from GDP.

The powerful growth pace came after governments across the country shut down large swaths of activity in an effort to stem the spread of Covid-19, which the World Health Organization declared a pandemic on March 11.

Since then, some 228,000 American lives have been lost to the virus, which has infected nearly 9 million. The economy has been in a technical recession since February, as first-quarter growth declined at a 5% pace.

While the news on Q3 was good for the $21.2 trillion economy, the U.S. faces a tougher road ahead as coronavirus cases increase and worries grow over the health and economic impacts. Nearly half the 22 million jobs lost in March and April remain unfilled and the unemployment rate remains at 7.9%, more than double its pre-pandemic level as 12.6 million Americans are still out of work.

The GDP release comes just five days before Election Day, which culminates a heated battle between President Donald Trump and his Democratic challenger, former Vice President Joe Biden. Trump has promised a return to the strong growth prior to the pandemic, while Biden has accused the Republican incumbent of taking a thriving economy into a ditch due to mismanagement of the virus.

“This is going to be seized upon by both ends of the political spectrum as either evidence of the strength of the post-lockdown economic rebound or a cursory warning that the gains could be short-lived,” said James McCann, senior global economist at Aberdeen Standard Investments. “The reality is that the GDP numbers demonstrate that the U.S. economy did indeed rebound strongly as lockdown measures were lifted.”

Q3 growth came amid a resurgence in consumer activity, which comprises 68% of GDP. Though most of the country remained in a cautious reopening, shoppers began returning to stores and the bar and restaurant industry entered the first tepid phase of resuming business despite restrictions on capacity.

Personal consumption increased 40.7%, while gross private domestic investment surged 83% amid a 59.3% increase on the residential side.

While the headline number “looks spectacular,” it still leaves growth 3.5% beneath its level at the end of 2019, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics. Shepherdson expects the consumer and business investment rebound that led Q3 to “rise much less quickly” in the final three months of the year.

“Absent new stimulus, and with Covid infections spreading rapidly, we’re sticking to our 4% forecast for Q4 growth, though the margin of error here is large at this point,” he added.

Economic activity was strong in the real estate sector, and consumer and business executive surveys showed that confidence has remained high about the future despite the virus-related setbacks.

Personal income fell sharply for the quarter as transfer payments from coronavirus relief efforts dissipated. Personal savings also declined but remained strong at a 15.8% rate, down from the record 25.7% in Q2.

The annualized measure represents how much GDP would grow over the course of a year at the current pace from the same lever a year ago. In terms of raw percent change from a year ago, the economy contracted 9% in the second quarter and 2.9% in Q3.

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