The Federal Reserve’s unsurprising decision to keep interest rates unchanged didn’t alter the market’s tepidly bearish trajectory today. The S&P 500‘s close of 2166.58 was 0.12% less than Tuesday’s closing price, but it was also basically where the index closed two Thursday’s ago. The S&P 500 hasn’t actually made a meaningfully lower low since then, nor has it traded above 2175 since then.
Not every stock is stuck in a rut at this time, though … unfortunately. Akamai Technologies, Inc. (NASDAQ:AKAM), Sprint Corp (NYSE:S) and Twitter Inc (NYSE:TWTR) were all deep in the red on Wednesday, mostly due to disappointing earnings and outlooks.
Here’s the rest of the story.
Akamai Technologies, Inc. (AKAM)
Internet technology company Akamai Technologies didn’t do as well as expected/hoped last quarter, and AKAM shareholders are paying a dear price for the shortcoming.
Akamai Technologies, which develops ways of making websites operate faster, earned an operating profit of 64 cents per share on revenue of $572 million in its second quarter of 2016. The bottom line topped estimates for an average profit of 63 cents per share, and the sales figure was 6% better than last year’s top line. But, revenue didn’t top or even meet the anticipated figure of $573.7 million.
Perhaps the biggest piece of the 13% plunge AKAM dished out today, however, stemmed from the lackluster Q3 outlook. The company now expects to report a per-share profit of between 59 and 62 cents per share on revenue of somewhere between $566 and $578 million. Analysts had been modeling an average profit of 66 cents per share of AKAM on sales of $590.9 million.
Sprint Corp (S)
Just to be clear, wireless carrier Sprint didn’t post its previous quarter’s numbers today, or even after the close yesterday. Sprint unveiled those surprisingly good numbers on Monday morning, along with an encouraging full-year outlook. S shares gained 35% between Monday morning and Tuesday’s close.
So what’s the reason for today’s 7% setback for Sprint? Profit taking, for one, but maybe more than anything, the market is coming to grips with the distinct possibility that the only thing driving new subscriber growth was its cut-throat pricing plans that aren’t sustainable offers.
CEO Marcelo Claure explained within the earnings release, “The 50% off promotion is not going to go on forever. There will be a time in the not so distant future in which we’re going to go back to traditional rate plans and we are doing some testing of other rate plans.” That makes the math look good, but it could hurt the much-needed marketability of its service.
Twitter Inc (TWTR)
Giving credit where it’s due, micro-blogging company Twitter has figured out a way of rekindling its user growth trend, even if at a snail’s pace. Last quarter, Twitter added about 3 million new active users after a couple of tepid quarters on that front.
CEO Jack Dorsey just doesn’t know how to turn more users (or even existing users) into more revenue. The company’s top line of $602 million missed estimates of $605.55 million. The operating profit of 13 cents per share was better than the expected profit of 10 cents per share of TWTR, but it still wasn’t enough to satisfy investors, given the company’s age and promise. As Suntrust analyst Bob Peck flatly put it, Twitter has monetization problems.
Like Akamai Technologies though, the biggest reason TWTR fell 14.5% on Wednesday may have been its guidance for the current quarter. The company only expects revenue to roll in somewhere between $590 million and $610 million. Analysts had collectively been expecting $678 million.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
