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  • Writer's pictureRealFacts Editorial Team

Oil and Mag 7 First Quarter Earnings Reports

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Last week was a huge week for earnings reports, 5 of the 7 of the Magnificent 7 have reported including: Microsoft, Amazon, Meta, Alphabet Inc., Tesla, as well as top Oil and Energy stocks Exxon Mobil and Chevron. This week we will look into the news driving the volatility among these stocks.

At first glance, Meta's earnings report for the first quarter of 2024 presents dropped 10% to around $440 a share. However, their earnings were positive and the company showcased robust revenue growth, with a remarkable 27% increase compared to the previous year. For the quarter they reported 36.455 billion beating the estimate of 36.147 billion, they are keeping their margins on profit consistent as well, surprising analysts expectations again with a 4.71 billion reported over the 4.32 billion estimate, a 9.02% beat.

This growth was fueled by a surge in ad impressions, up by 20%, and a 6% rise in the average price per ad. Moreover, Meta's user base continued to expand, with daily active users reaching a staggering 3.24 billion in March, reflecting a 7% increase. Furthermore, Meta demonstrated prudent financial management, as evidenced by its ability to keep expenses in check, with a modest 6% rise. Additionally, Meta generated an impressive $12.5 billion in free cash flow, a significant increase from the previous year.

Despite these positive indicators, investors were unnerved by certain aspects of Meta's earnings report. One key concern was the company's revised outlook for full-year expenses and capital expenditure. Meta now anticipates higher expenses ranging from $96 billion to $99 billion, driven primarily by increased infrastructure and legal costs. Moreover, the company raised its capital expenditure budget from $30 billion to $37 billion to a new range of $35 billion to $40 billion.

Meta's ambitious investments in its Reality Labs segment, which is the department behind building the metaverse, has led investors to wonder if the investment will pay off. Despite the potential long-term benefits of this venture, the segment incurred a significant loss of $3.8 billion in the first quarter. This has raised doubts among investors along with the insights on higher costs and has led to the sell off resulting in the 10% drop in stock price.

Meta's earnings report also highlights promising developments in its core business areas. The company has a focus on advancing headwear (VR headsets) and glassware technologies for the future. We see that as glasses and VR headsets enter the market and improve they may be the replacements of the laptops and smartphones today. Meta is competing for one to produce the hardware of the future and also build the metaverse in which we can interact. It is a big bet but has a good chance of working out to be very profitable.

Meta's recent earnings report and sell off should be seen as a good buying opportunity. With a fair share price rated at 579.33 and 61 analysts have rated the stock as a strong buy with a $525 as a 1-year price target. With its strong earnings report and consistent margins the short term losses they are taking on expenses are outweighed by the potential that Meta has in store.

Quarterly graphs

Revenue to profit conversion graph

Alphabet Inc.,, has reached a significant milestone with its market capitalization surpassing $2 trillion following an extraordinary surge in its stock price fueled by stellar first-quarter earnings, jumping nearly $20 a share. Alphabet's first-quarter earnings report for 2024 has surpassed expectations by a wide margin. The company reported revenue of $80.5 billion and earnings per share of $1.89, significantly outperforming analyst estimates of $78.8 billion and $1.51, respectively. This remarkable performance marks Alphabet's best-ever quarterly profit, driven by a staggering 62% year-over-year growth, with net income reaching nearly $24 billion.

Following the release of its earnings report, Alphabet's shares surged by more than 12% in after-hours trading, signaling a substantial increase in the company's market capitalization. If this trend persists, Alphabet is poised to become only the fourth company in the world, alongside Microsoft, Apple, and Nvidia, to achieve a market valuation exceeding $2 trillion. This milestone underscores Alphabet's status as a global tech powerhouse and solidifies its position among the elite ranks of the world's most valuable companies.

Several key factors have contributed to Alphabet's remarkable earnings and subsequent stock price surge. Firstly, the company's core business, which revolves around online advertising, continues to thrive, with ads accounting for more than 75% of its total revenues. Despite increasing competition in the digital advertising space, Alphabet's dominance in online search and video platforms like Google Search and YouTube remains unchallenged, driving robust revenue growth.

In addition to its advertising business, Alphabet has been strategically diversifying its revenue streams through ventures such as cloud computing services and hardware products. The company's cloud division reported revenue of $9.57 billion in the first quarter, reflecting a significant increase from the previous year. Moreover, Alphabet's investments in AI research and infrastructure have positioned it at the forefront of technological innovation, paving the way for future growth opportunities.

Alphabet's decision to initiate a cash dividend program, announced alongside its earnings report, marks a significant milestone in the company's financial maturity. The modest dividend yield of approximately 0.5% reflects Google's commitment to rewarding shareholders while maintaining financial discipline. This move aligns with a broader trend among tech giants, with rivals like Meta also recently initiating dividend payouts.

Despite falling short of analyst expectations in its first-quarter earnings report, Tesla's stock surged significantly, fueled by CEO Elon Musk's commitments to affordable vehicles and advancements in autonomous driving technology. The stock took a tumble to around $140-150 dollars a share but since then has rebounded with established goals and guidance given from Elon Musk with the direction the company is going to go has sparked confidence and is trading above $190 now, a 35% price increase.

Tesla's first-quarter earnings report revealed a substantial miss in comparison to analyst estimates. Reporting revenue of $21.3 billion and adjusted earnings per share of $0.45, falling

short of expectations, Tesla's stock surged by as much as 14% the day of earnings.Amid concerns that Tesla might be veering away from its promise of producing low-cost vehicles to prioritize its robotaxi ambitions, the company's leadership clarified its stance. Tesla emphasized its dedication to both endeavors, outlining plans to accelerate the launch of low-cost vehicles in a more capital-efficient manner. CEO Elon Musk's assurance of updating Tesla's future vehicle lineup to include more affordable models reassured investors and underscored the company's long-term growth strategy.

Despite the initial disappointment stemming from the earnings miss, Tesla's stock performance rebounded strongly, buoyed by Musk's visionary outlook and strategic announcements. Wall Street analysts, while acknowledging the challenges Tesla faces, expressed optimism following the earnings call. Wedbush analyst Dan Ives lauded Musk's leadership and growth strategy, albeit revising down his price target for Tesla stock.

Elon Musk's promises regarding Tesla's Full Self-Driving (FSD) software have long captured investor attention. Recent developments, including Musk's productive trip to China and the subsequent approval for rolling out FSD software in Chinese-built EVs, signal significant progress. Despite Tesla's current FSD version requiring 100% driver supervision, investors remain bullish on the potential for autonomous driving technology to enhance Tesla's value proposition.

In 2023, Chevron returned a record $26.3 billion in cash to shareholders, including a $11.3 billion in dividends. Dividend per share increased by 8% in early 2024, marking its 37th consecutive year of dividend growth. Despite reporting fourth-quarter earnings of $2.3 billion (or $1.22 per share), Chevron's adjusted earnings, which accounted for $3.7 billion in charges, stood at $6.5 billion (or $3.45 per share). Notably, foreign currency charges impacted earnings by nearly $480 million.

As of April 29, 2024, Chevron's stock price reached $167.00 per share, with a market capitalization around $308 billion. It has reacted positively to the earnings report Friday the 26th trading positively today and up 3.45% the past week. With a dividend yield of 3.8%, Chevron remains an attractive investment option for income-seeking investors. However, the pending acquisition of Hess for $53 billion in stock could potentially impact Chevron's total dividend outlay this year. The acquisition involves issuing 317 million new shares to Hess shareholders, potentially increasing Chevron's outstanding shares and dividend payments. Nevertheless, uncertainties surrounding a dispute between Exxon and CNOOC over Hess' stake in a lucrative project in Guyana could affect the deal's closing timeline.

Chevron's first-quarter 2024 earnings call reported adjusted earnings exceeding $5 billion for the ninth consecutive quarter, with $6 billion returned to shareholders during the quarter. Additionally, Chevron achieved over 10% growth in production compared to the same quarter last year, primarily driven by acquisitions and organic growth in the Permian Basin. The

company also demonstrated its commitment to diversifying its energy portfolio through investments in renewable fuels and hydrogen businesses.

Chevron's strategic initiatives include advancing the merger with Hess, expanding its renewable energy portfolio, and optimizing operational efficiency. The merger with Hess is progressing, with plans to certify substantial compliance with regulatory requests, aiming to create a premier energy company. Moreover, Chevron's investments in renewable fuels and hydrogen underscore its commitment to sustainability and future growth opportunities. Operational updates, such as progress in projects like TCO, further reinforce Chevron's position as a leading energy company.

Exxon Mobil Corporation (NYSE: XOM) first quarter 2024 earnings report, sparking mixed reactions from investors and analysts. While the company surpassed revenue expectations, it fell short on earnings, leading to a notable decline in its stock price. But has since had a rebound since then.

Exxon Mobil reported total revenue of $83.083 billion for Q1 2024. Despite beating revenue expectations, the company faced challenges in its operating income, which declined by a substantial 43.97% year-over-year, amounting to $10.748 billion for the reporting period. Additionally, Exxon Mobil's upstream production experienced a slight decline of 1.23% compared to the corresponding quarter of last year, producing an average of 3.784 million barrels of oil equivalent per day. Notably, the company reported a net income of $8.220 billion for Q1 2024, reflecting a significant 28.08% decline from the first quarter of 2023.

Exxon Mobil's Q1 2024 performance was impacted by several operational challenges and market dynamics. Lower natural gas prices, influenced by warm weather and oversupply, contributed to a decline in upstream earnings, despite a 4% increase in crude oil realizations. The company's exposure to natural gas markets in the United States and Europe resulted in

non-cash impacts from tax adjustments and divestments. However, it's worth noting that despite lower natural gas prices, Exxon Mobil's upstream realizations remained relatively resilient.

Despite the challenges faced in Q1 2024, Exxon Mobil maintains strong growth prospects. The company announced a final investment decision for the Whiptail development in Guyana, expected to add approximately 250,000 oil-equivalent barrels per day of gross capacity by late 2027. Additionally, ongoing projects in the Permian Basin, Brazil, and other regions are poised to contribute to production growth in the coming years. With a focus on strategic investments and project development, Exxon Mobil aims to enhance its upstream profitability and overall revenue.

Exxon Mobil's financial strength remains a key pillar of its business, underscored by its low leverage and stable net interest expenses. With a net debt-to-equity ratio of 0.03, the company demonstrates prudent financial management and resilience to market fluctuations.

Despite declining energy prices and operational challenges, Exxon Mobil's balance sheet remains robust, providing a solid foundation for future growth initiatives and shareholder value creation.

Exxon Mobil's current valuation presents an attractive opportunity for investors seeking exposure to the energy sector. With a forward price-to-earnings ratio of 12.16, the stock is priced below the broader market and its peers, offering potential upside potential. Despite short-term challenges, Exxon Mobil's long-term growth prospects, coupled with its strong financial position, position it as a compelling investment opportunity. As oil prices trend upward and production growth initiatives unfold, Exxon Mobil is well-positioned to deliver value to shareholders over the coming years.

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