Well folks, earnings season is certainly heating up. In the last week or so, several more well-known companies announced their earnings for the first-quarter earnings season.

Everyone from streaming giants to big banks to top tech companies are opening their books, revealing their quarterly numbers and sharing guidance for the coming quarters. Today I’d like to take you through some of the biggest earnings from this week: Netflix (NASDAQ:NFLX), Tesla (NASDAQ:TSLA), Bank of America (NYSE:BAC), IBM (NYSE:IBM) and Johnson & Johnson (NYSE:JNJ).

Netflix, Inc (NFLX): First-Quarter Earnings Announced on Tuesday, April 19

Netflix reported earnings of $3.53 per share, down 5.9% from earnings of $3.75 per share in the same quarter of last year. Revenue of $7.87 billion grew 9.9% year-over-year, up from $7.16 billion a year ago. Analysts were expecting earnings of $2.89 per share on revenue of $7.93 billion, so the company posted a 22.1% earnings surprise and slight revenue miss.

The year-over-year earnings decline and slight revenue gain is already a red flag, but it was the streaming platform’s subscriber numbers that really spooked investors.

Netflix reported a loss of 200,000 subscribers in the first quarter. This is the first time in over a decade that the company has announced a subscriber loss – the last time the company saw a dip in subscriptions was in October 2011. For the second quarter, Netflix anticipates it will lose another two million subscribers.

This loss came as a huge surprise to Wall Street since Netflix had guided for an additional 2.5 million new subscribers. Analyst forecasts were for 2.7 million subscribers, so this was a stunning miss. For reference, last year the company added 3.98 million subscribers this quarter.

During the earnings conference call, CEO Reed Hastings said that the company is considering adding subscription tiers to the streaming platform to make it more accessible. Lower tiered subscriptions would be ad supported and lower priced. This would be similar to what Hulu offers.

For the next quarter, analysts anticipate earnings of $3.02 per share on revenue of $8.2 billion.

Here’s the reality: As the COVID-19 pandemic heightened and lockdown began, people hunkered in their homes subscribed to streaming platforms like Netflix. The company made big gains – in April 2020 it reported it had added 16 million subscribers between January and March.

But that momentum eased up as people began leaving their homes again and flocking to outside entertainment. The fact of the matter is Netflix’s subscriber growth had begun to tap the brakes in its fourth quarter of 2021. For its fourth quarter, the company reported that it added 8.3 million new subscribers, below its internal target of 8.5 million. The silver lining here is that this topped analysts’ projections for 8.2 million new subscribers.

However, the stock plunged more than 21% in the wake of its disappointing fourth-quarter results, and the stock’s response to the slowdown in subscriber growth in the first quarter of this year was even worse.

In the wake of disastrous earnings report, Netflix plunged 39% to a new 52-week intraday low of $212.51, taking it back to pre-pandemic levels. I should add that the stock is down 37% for the week and 64% year-to-date.

Those who had invested in Netflix ahead of the company’s earnings results took it on the chin. Even Bill Ackman’s Pershing Square Capital Management hedge fund took more than $400 million hit after the fund sold 3.1 million shares that it had initially purchased for a whopping $1.1 billion back in January. However, investors following my Portfolio Grader would have known to stay far away…

As you can see in the Report Card above, the stock earns a D-rating for its Total Grade. I also want to note that its Quantitative Grade is an “F,” which means that institutional pressure had dried up in the stock.

As I mentioned, the stock was hit hard post-earnings. But it wasn’t the only streaming service that declined, Roku (NASDAQ:ROKU), Spotify (NYSE:SPOT) and Disney (NYSE:DIS) also dipped after Netflix’s earnings, slipping 1.3%, 2%, and 1.6%, respectively.

I should add that the tech-heavy NASDAQ pulled back as well, falling more than 1%. The truth of the matter is Netflix’s earnings report hurt the whole tech neighborhood.

Tesla, Inc (TSLA): First-Quarter Earnings Announced on Wednesday, April 20.  

Tesla reported stunning results for its first quarter in fiscal year 2022. Earnings surged 246% year-over-year to $3.22 per share, up from earnings of $0.93 per share in the same quarter of last year. Analysts were calling for earnings of $2.27 per share, so Tesla posted a 42% earnings surprise.

The company also beat analysts’ estimates on revenue. Revenue of $18.76 billion came in 5% higher than analysts’ estimates for revenue of$17.84 billion. For the same quarter last year, the company reported revenue of $10.39 billion, so the company’s revenue increased 71.7% year-over-year.

CEO Elon Musk and CFO Zachary Kirkhorn both expressed their confidence in a 50% growth rate in vehicle production in an earnings call. The higher rate of vehicle production contributed to the strong revenue growth this quarter. Looking forward, they expect production in the second quarter to be equal to the first quarter despite the recent shutdown of Tesla’s Shanghai plant.

Musk also talked about the development of Tesla’s new robotaxi, which doesn’t have a steering wheel or pedals, noting that it will contribute to the company’s future growth.

“Basically the future is very exciting,” he said. “I’ve never been more optimistic or excited about Tesla’s future than I am right now.”

Again, folks using my Portfolio Grader tool would have known Tesla was a “Buy” leading into earnings. As I discussed on Tuesday, this was a solid stock, but it’s also a volatile and expensive one.

Clearly, Wall Street was pleased with Tesla’s results, as the stock jumped more than 7% on the heels of its earnings report on Thursday.

Now, I’d be remiss if I didn’t mention a few other important earnings reports that hit Wall Street this week…

Bank of America (BAC): First-Quarter Earnings Announced on Monday, April 18.

• Earnings of $0.80 cents per share beat analysts’ estimates for $0.76 per share by 5%
• Revenue of $23.2 billion beat analysts’ estimates of $23.1 billion
• The stock spiked nearly 4% after earnings

IBM (IBM): First-Quarter Earnings Announced on Tuesday, April 19

• Earnings of $1.40 per share climbed 24.4% year-over-year, up 24.4% from the same quarter a year prior
• Revenue of $14.2 billion increased 7.7% year-over-year
• Analysts were calling for earnings of $1.38 per share on revenue of $13.85 billion, so the company posted a 1.4% earnings beat and a 2.5% revenue beat
• The stock jumped 2.5% after earnings

Johnson & Johnson (JNJ): First-Quarter Earnings Announced on Tuesday, April 19.

• Earnings of $2.67 per share beat analysts’ estimates for earnings of $2.56 per share by 4.3%
• Revenue of $23.43 billion missed analysts’ revenue expectations by 1.6%
• After earnings, the stock spiked 3%.
• Quarterly dividends will be increased from $1.06 per share to $1.13 per share

And there you have it! The big earnings of this week. The clear loser here was Netflix and the winner was Tesla. At the end of the day, earnings will ultimately rule the roost – and that’s exactly what we saw this week. It’s why it’s critical that you invest in fundamentally superior stocks. These are the companies that will emerge as the market leaders.

It’s why I only recommend in fundamentally superior stocks in Growth Investor. Case in point: Nucor (NYSE:NUE).

Nucor is one of the leading providers of steel and steel products in North America, and it’s benefitted immensely from the robust demand for steel. In fact, Nucor announced on Thursday that it achieved its most profitable first quarter in company history.

First-quarter earnings soared 147.4% year-over-year to $2.10 billion, or $7.67 per share, up from $942.4 million, or $3.10 per share, in the same quarter a year ago. Analysts were expecting earnings of $7.30 per share, so Nucor posted a 5.1% earnings surprise. First-quarter sales rose 50% year-over-year to $10.49 billion, compared to $7.02 billion in the first quarter of 2021. Analysts were expecting sales of $10.48 billion.

The stock surged more than 10% Thursday morning to a new 52-week high in the wake of the stunning results and ended the day on a positive note while the broader market sold off.  I should add that it’s also significantly outperformed Tesla this year. Year-to-date, NUE is up more than 50% while Tesla is about flat. I recommended Nucor to my Growth Investor subscribers back in November 2021, so they’ve been able to enjoy NUE’s ride higher.

As I’ve been saying, there are better opportunities out there, you just have to know where to look. Right now, it’s the companies that are well-positioned to prosper in an inflationary environment. The fact of the matter is their earnings and sales should continue to accelerate while the market’s earnings growth hits the brakes.

As we’ve discussed recently, inflation is still red-hot on both the consumer and wholesale levels. So, it’s important to focus on strategic inflation hedges. This includes my Growth Investor Buy Lists, which are chock-full of fundamentally superior energy, fertilizer, food and shipping and semiconductor stocks. In fact, all of my energy stocks are forecast to report at least double-digit earnings growth in their latest quarters, with several expected to post triple-digit year-over-year earnings growth.

Join me at Growth Investor today to receive full access to my “inflation-proof” Buy Lists. This includes my newest recommendations and Top Stocks lists.

P.S. Luke Lango, the Caltech math prodigy with over a dozen 1,000% gains, has just uncovered one of the strangest money-making opportunities of the century.

His data shows that the recent market volatility has created one of the biggest buying opportunities in 14 years.

In his own words:

“A Divergence Window is opening, and those who are sitting on the sidelines are missing out on the chance to put their retirement goals on hyperdrive.”

To put it simply, Luke’s research indicates that a certain class of stocks is virtually guaranteed to explode shortly following market volatility – just like we’ve seen over the past few months.

That’s the secret key to these divergence windows.

The last time this “divergence window” opened in 2008, investors were able to see gains as high as…

• 1,730%
• 525%
• 935%
• 1,569%
• 2,150%
• 591%
• 861%

But Luke says that’s nothing compared to what he sees coming during the divergence window of 2022.

That’s why his team has been working around the clock to monitor this historic event and make sure readers are ready when it lands.

Stay tuned: Divergence is coming, and you do not want to miss out.

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below: