The stock market continued to lose ground on Monday, and once again, the Nasdaq Composite (NASDAQINDEX: ^IXIC) took another big hit. As of 3 p.m. ET, the Nasdaq was down 251 points to 13,518.
At its worst levels of the day, Monday’s move lower for the Nasdaq brought its total decline since hitting all-time records just a few months ago to more than 19%. It wouldn’t take much more to meet the official 20% definition of a bear market drop. Earnings season is about to shift into high gear, and among the top Nasdaq stocks reporting results this week will be Tesla (NASDAQ: TSLA) and Apple (NASDAQ: AAPL). Here’s why what the two corporate giants say in their respective reports could be what determines the future course of the Nasdaq and the entire stock market.
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Tesla looks to hit the accelerator
Shares of Tesla were down 5% late Monday afternoon, although that drop was about half what it had been earlier in the day. The electric vehicle pioneer is set to report its latest results Wednesday afternoon.
Investors expect big things from Tesla when it reports. Projections for sales of $16.35 billion would be up more than 50% from year-ago levels. Earnings of $2.26 per share would be nearly triple the $0.80 per share in adjusted earnings the company posted this time last year.
Tesla already gave shareholders a sense of what to expect in early January, when it released its production and delivery figures for the fourth quarter. Tesla produced nearly 306,000 vehicles and delivered 308,600 for the period, bringing its respective totals for the full 2021 year to roughly 930,000 and 936,000.
However, what’s left for Tesla to reveal is how those unit sales translated into dollar-based revenue, as well as how profitable its sales activities were. Investors have come to expect a lot from Tesla, but there’s recognition that the industry faces some unusual challenges right now that could hold back short-term results. Given how fragile the market has been lately, unexpectedly strong numbers from Tesla could be exactly what the Nasdaq needs to mount a comeback. Disappointment, though, could be costly.
Can Apple keep moving forward in 2022?
Meanwhile, shares of Apple were down a bit more than 2%, rebounding nicely from larger losses earlier in the day. The iPhone maker has just as many people watching to see how its fiscal first-quarter financial results will look Thursday afternoon, and while they’ll pay attention to how the holiday season went, shareholders also want reassurance that Apple’s future still looks bright.
Apple’s business is mature enough that Tesla-size revenue gains aren’t possible, but that isn’t stopping shareholders from having high hopes. Consensus forecasts call for about $118.4 billion in sales, producing earnings of $1.88 per share, up roughly 12% year over year.
Indeed, many are worried that Apple might not be able to live up to expectations at all. CEO Tim Cook warned that supply chain issues have already disrupted the electronic device maker’s business, costing the company billions in the fiscal fourth quarter of last year. Moreover, if those challenges persist, they could hold back Apple’s ability to return to more considerable growth in the fiscal second quarter.
Apple’s business is so huge that it has a massive effect on a wide range of suppliers and related companies. Any shortfall could ripple across the tech sector, but an upbeat assessment could restore confidence in the entire market.
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Dan Caplinger owns Apple. The Motley Fool owns and recommends Apple and Tesla. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
