Trading technology stocks is becoming increasingly difficult. The mega-technology companies known as the “Magnificent Seven” lost a total of one trillion dollars in value in the global stock market crash on August 5th. NVIDIA (NASDAQ:NVDA) lost $168 billion in market capitalization as its share price fell 6.4%. Apple (NASDAQ:AAPL) And Amazon (NASDAQ:Amazon) closed the day down 4.8% and 4.1%, respectively. As you can see, market volatility affects even the biggest names and helps identify the best tech stocks to sell after earnings releases.
But the declines are broader. Many technology stocks have suffered losses since early July as investors began shifting money out of tech stocks and into value and small-cap securities. That shift has only intensified amid growing fears that the U.S. economy is heading for a recession and the fact that many big-name technology companies reported poor second-quarter financial results.
This is a major turnaround from the first half of this year, when technology stocks led the market rally as investors capitalized on the hype surrounding artificial intelligence (AI). Here are three technology stocks to sell after earnings releases.
Super Microcomputer (SMCI)
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Not even a 1:10 share split could conceal this Super Micro Computer (NASDAQ:SMCI) terrible second-quarter financial results. SMCI stock has fallen 18% over the past five days as the company reported earnings per share of $6.25, missing Wall Street’s target of $8.07. Revenue came in at $5.31 billion, just slightly better than the $5.30 billion forecast.
Perhaps worst of all, Super Micro Computer reported that its gross margin fell to 11.2% in the second quarter from 17% a year ago. A lower margin means the company is making less profit on each product it sells. The company’s guidance was also underwhelming. Third-quarter earnings guidance of $7.48 was below consensus estimates of $7.58.
As for the stock split, it’s scheduled to happen on October 1. But is a split even necessary, given that the stock has fallen 60% since its 52-week high and is trading below $500 per share? SMCI stock has fallen 45% since the beginning of July, making it a tech stock to sell after the earnings release.
Airbnb (ABNB)
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Almost as bad as the Q2 report delivered by Super Micro Computer was the one from Airbnb (NASDAQ:ABNB). The company’s shares plunged 15% after management reported second-quarter earnings that missed Wall Street targets. Airbnb reported earnings per share of 86 cents, below analysts’ consensus forecast of 92 cents.
Revenue of $2.75 billion slightly beat estimates of $2.74 billion and was 11% higher than the previous year. However, the outlook provided on the conference call caused the stock to fall. Specifically, management warned that it expects some slowdown in bookings in the current third quarter compared to the previous year. They indicated that they see “…some signs of slowing demand from US guests.”
Investors are paying close attention to signs that consumers are cutting back on spending amid growing evidence that the U.S. economy is slowing and could be heading toward a recession. ABNB stock has fallen 22% over the past 12 months.
Coinbase (COIN)
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Cryptocurrency exchange Coinbase (NASDAQ:COIN) reported excellent financial figures for the first quarter, Bitcoin (BTC-USD), prices were at an all-time high. But that was then, this is now. For the second quarter, Coinbase reported decidedly mixed financial results amid a collapse in cryptocurrency prices and trading demand. Specifically, Coinbase reported earnings per share of 14 cents, well short of Wall Street’s consensus target of 94 cents.
While revenue of $1.45 billion beat the average analyst estimate of $1.37 billion, second-quarter revenue fell 27% from the previous quarter. The company said its results suffered from a decline in trading volume and losses on its crypto assets. Management said trading activity on its exchange was muted as crypto prices have slumped and been trapped in a range over the past few months. COIN stock has fallen 20% since the release of its Q2 results, making it a tech stock to sell after earnings.
On the date of publication, Joel Baglole held a long position in NVDA. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publishing policies.
At the time of publication, the responsible editor held a LONG position in NVDA.
