Five Stocks with Surprisingly Strong Quarter 4 Earnings

We are halfway through the fourth quarter earnings season. This is the time when companies share their performance for the previous year. So far, there has been some good news.

Despite a slow economy in 2022 and several companies like Tesla, Uber, and Airbnb performed extraordinarily well and beat analysts’ predictions for bottom-line and top-line numbers.

A strong quarter-end earnings report does not necessarily mean that the company will be able to repeat its performance in 2023. It does however indicate that the company is trying to adapt to changing circumstances and could be a strong contender against rising interest rates or investor pessimism.

Let’s now see how five companies beat analyst estimates and what this means for 2023.

• Released Jan. 25, 2023

• Summary of the Q4 earnings report: Tesla reported higher earnings (Q42021) than last year. They also had their highest quarterly revenue, operating income, and net income ever.

• What it did:

• 
  
  Why investors are bullish:
  
  

  • 
    Tesla sold 405,278 electric vehicles in Q4 compared to 308,600 during the same period lastyear.
    

  • 
    The company now produces 2 million EVs annually across all its factories. They are now on track to produce a record number of EVs per year in 2023, compared to the 1.37 million currently.
    

  • 
    Musk claims that Tesla demand grew in January 2023, after Tesla cut its prices for EVs at the end of last year.
    

• 
  
  Why are some investors bearish?
  
  

  • 
    Tesla reported a lower gross profit (25.9%) than in Q4 2021 (30.6%). This means Tesla retains less sales revenue after subtracting production costs.
    

  • 
    Tesla’s Shanghai plant produces approximately 750,000 EVs annually. In December, it stopped production.
    

  • 
    Tesla has recalled 360,000 vehicles due to problems with its driver-assistance software.
    

• Date published : February 8, 2023

• Summary of the Q4 earnings report: Uber’s strongest quarter yet. With more rides-shares and deliveries than ever before, revenue was up 49% year-over year. The platform had 131,000,000 customers (an increase of 11%) and 5.4 Million drivers — an all time high.

It beat all expectations:

• 
  
  Why investors are bullish:
  
  

  • 
    Uber reached a milestone in its first quarter: 2 billion trips were made within the same quarter. This is roughly 23 million trips per hour.
    

  • 
    The number of active drivers reached an all-time record of 5.4 millions.
    

  • 
    Despite rising transportation costs and food prices, Uber does not see a drop in its customers. According to Uber, 131 million customers is an increase of 11% over the previous year.
    

  • 
    The company expects that gross bookings will increase by 20% to 24% in Q1-2023.
    

• 
  
  Why are some investors bearish?
  
  

  • 
    Uber’s freight segment, which accounts for 17.8% of its Q4 revenue, could be in trouble by 2023. In 2023, the company anticipates that freight volume will decrease slightly, particularly if consumers purchase fewer items and manufacturers ship fewer.
    

• – February 13, 2023

• Summary of Q4 earnings: Palantir, an data analytics company, reported a higher revenue for all business segments. Revenues from government clients increased 23% year-over-year, while revenues from commercial clients were up 11%.

• How it exceeded expectations:

• 
  
  Why investors are bullish:
  
  

  • 
    For the first time ever, the company was able to achieve profitability in the fourth quarter.
    

• Why some bearish investors:

  • 
    Analysts are expecting Palantir to project Q1 2023 at $503 million to 507 million, versus $520.28 millions.
    

• Date published : February 14, 2023

• Summary of Q4 earnings reports: Airbnb reported its first profitable year and saw its highest market day ever. Both revenue and net income were higher in the fourth quarter than for the entire 2022 year. The company had more nights and bookings in 2022 than it did in 2021.

• It beat all expectations:

• 
  
  Why investors are bullish:
  
  

  • 
    Airbnb was profitable throughout 2022 — its first year in history.
    

  • 
    Airbnb beat analysts’ expectations for the sixth consecutive quarter.
    

  • 
    Travel sector growth is forecast to be slightly lower than in 2019, which was its last boom year. Airbnb and other vacation rental companies could benefit from more growth in this sector.
    

• 
  
  Why are some investors bearish?
  
  

  • 
    Analysts were disappointed that nights and experiences booked were lower than expected — 88.2 Million reported versus 90.1 Million.
    

  • 
    China was closed down by the company, effectively resulting in 150,000 missing listings.
    

  • 
    Year after year, active listings continue to fall. The company had 6.6 million listings in 2022; this was less than the 8.5 millions it had in 2021.
    

• Released : February 14, 2023

• Summary of Q4 earnings reports: Q4 revenue was 47% more than the previous year. The total revenue for 2022 was also significantly higher than anticipated, approximately 65% more than 2021.

It beat all expectations:

• 
  
  Why investors are bullish:
  
  

  • 
    Tripadvisor’s 2022 quarter-end revenue of $354 million was slightly more than its 2019 quarter-end revenue of $335 million, indicating that the company has returned to pre-pandemic levels.
    

• Why some bearish investors:

  • 
    The company did not provide any forward guidance for 2023. Experts interpreted this to mean TripAdvisor would rather maintain its margins than invest in growth.