Business

Amazon earnings; Tesla's ugly quarter; Facebook fine

Posted April 25, 2019 5:01 a.m. EDT

— 1. Amazon earnings: Shares in Amazon have gained 26% so far in 2019, easily outpacing the rest of the S&P 500, which has advanced roughly 17%.

The e-commerce giant could add to its momentum when it reports earnings after the closing bell.

Analysts expect Amazon to report sales of nearly $60 billion for the first three months of 2019, a 17% improvement over the same period last year.

Income is forecast to jump nearly 40% to $2.4 billion.

There could be increased focus on Amazon Prime video given Disney's venture into the streaming realm as well as Apple's new streaming service.

2. Tesla's ugly quarter: Tesla said Wednesday that it lost $702 million in the first three months of the year. Its revenue was down 37% compared to the prior quarter.

Wall Street was already bracing for a bad quarter — but the results were far worse than expected. The company had posted back-to-back profits in the previous two quarters.

The disappointing performance was caused by factors including changes to US tax credits for Tesla cars and increased competition from rivals like Porsche, Audi and Mercedes.

"None of these issues are going away. This is the new normal for Tesla," said Karl Brauer, executive publisher at Kelley Blue Book and Autotrader.

Tesla stock was poised to open lower on Thursday.

3. Facebook fine: Facebook expects an investigation by the US Federal Trade Commission could result in fines of up to $5 billion.

The company on Wednesday set aside $3 billion in legal expenses related to the investigation, which cut into its profit for the first three months of 2019.

Facebook's profit for the quarter was $2.4 billion, a decrease of 51% from the same period a year ago.

For all its scandals, Facebook's ad sales business continues to power along. Its revenue for the quarter topped $15 billion, a 26% increase from a year earlier.

Shares in the tech company were sharply higher in premarket trade.

4. European banks: German rivals Deutsche Bank and Commerzbank have broken off merger talks.

Deutsche Bank said in a statement Thursday that its management board had concluded that restructuring costs and capital requirements were too steep.

The combination had faced opposition from powerful labor unions and would have been closely examined by EU regulators who may have preferred a cross-border merger.

There was plenty of other banking news in Europe. Barclays stock dropped 2% after earnings showed that its investment bank continues to struggle.

Shares in UBS gained 1.5% in Switzerland despite a 27% decline in profit last quarter. CEO Sergio Ermotti maintains that the bank will post stronger results in the second half of the year.

Royal Bank of Scotland announced that Ross McEwan has resigned as CEO. The bank returned to profit under his tenure, which started in 2013.

5. Walmart disappointed: The company's plan to sell its UK supermarket brand, Asda, to Sainsbury's have been killed off by British antitrust regulators.

Walmart International CEO Judith McKenna said the company would focus on positioning Asda as "a strong UK retailer delivering for customers." Walmart would ensure "Asda has the resources it needs to achieve that," she added.

6. Global market overview: US stock futures were little changed.

European markets opened with small losses. Stocks in Asia closed mostly lower. Markets in mainland China were the biggest losers, with the Shanghai Composite shedding 2.4%.

US stocks ended lower on Wednesday, just one day after the S&P 500 and Nasdaq finished at a record high. The Dow shed 0.2%. The S&P 500 and the Nasdaq both dropped 0.2%.

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7. Earnings bonanza: 3M, Bristol-Myers, Comcast, Hershey Foods, Hess, Raytheon, Southwest Air, UPS and Xerox will release earnings before the open.

Up after the close: Amazon, Alaska Air, Capital One, Ford Motor, GrubHub, Intel, Mattel, Starbucks and T-Mobile US.

8. Coming this week:Thursday — Amazon and Starbucks earningsFriday — US first-quarter GDP; April US consumer sentiment