Let’s review some of tech’s big second quarter financial stories

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Let’s review some of tech’s big second quarter financial stories

Now that the second-quarter “earnings season” — when all of the biggest public tech companies spill their financial guts to the public — is over, and it was filled with a lot of weird stories that seemed a little outside of the mold that we normally see.

There weren’t any blockbuster product launches, huge advertising beats, wildly surprising numbers (outside of Netflix) or alarmingly large bouts of layoffs. Still, even beyond that, this quarter managed to deliver a surprisingly large number of interesting stories in just about every report.

With that, let’s take a quick look at some of the highlights from this quarter.

1/12

Apple signals a big one

The verdict: beat (sort of)

This one was a weird one for Apple. The stock got a nice bump after it reported its second quarter, continuing a healthy run for the company that may have put it on the trajectory of hitting $1 trillion in market cap. It checked off all the boxes for a quarter in the front half of the year, services continued to grow, and for the most part, it was pretty ho-hum. But the company signaled that it would likely have a big third quarter, which is normally around the time that it releases a new iPhone.

So, hold your breath on this one, folks.

2/12

Twitter craters again

The verdict: flop

Well, what did we really expect to happen? Twitter’s user growth went nowhere, and in a very Twitter thing to happen, the stock fell off a cliff. In this quarter, Twitter’s monthly active users in the U.S. actually fell very slightly. The company is still in search of a way to reignite that user growth, which for better or worse, is still the core metric on which Wall Street judges.

On the bright side, we got a mystery chart that says its DAUs are growing, but we still don’t know what the DAU count is for the company.

3/12

Snap craters, too

The verdict: flop

Now that Facebook is rapidly copying Snap, Wall Street is hoping that the company will continue to sustain its growth in daily active users. Snap may, potentially, be an alternative to Facebook for advertisers. But it’s only viable if it can demonstrate a different kind of audience with strong engagement metrics.

As a result of weak DAU growth, Snap’s stock cratered and hit an all-time low earlier this month — down more than 14% after its earnings report. Facebook will keep pulling a Facebook and copying Snap, and now the company will face a major challenge as it tries to tell its growth story in a way that keeps Wall Street happy.

4/12

Facebook takes a hard look at Messenger

The verdict: beat (ish)

Wall Street may have been a little too excited with this report, but never the less, the company still trucks along. The stock made quite the leap after the earnings call, but not necessarily because of its core performance.

Here’s what happened: CEO Mark Zuckerberg said on the call that he wanted the company to “move a little faster” when it came to Messenger and potentially monetizing it. Over the course of the call, he tried worked to temper expectations on that initial comment. Still, Wall Street loves to hang onto the knee-jerk comments by CEOs and executives as they tend to signal something going forward.

Facebook’s revenue growth is slowing, and while it still has a ton of users, it’s running out of places to put ads. So it’s easy to see why investors started freaking out about those comments.

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5/12

Google gives off mixed signals

The verdict: mixed

There were two big themes in this earnings report, which sent the stock down a fair bit after it came out at the end of July.

The first major ding was that the company wrote off a massive $2.7 billion fine from the EU, which put a lot of pressure on this quarter. Google may have continued to show growth in its gargantuan advertising business, but that’s quite the hit.

Perhaps the more alarming component, though, is that what’s known as its “traffic acquisition cost” is starting to creep up. This quarter, it increased as a percentage of the company’s revenue — and while it was a small amount, those little inches higher may end up being a negative signal to Wall Street.

6/12

Microsoft's cloud shines

The verdict: beat

Microsoft CEO Satya Nadella’s re-envisioning of the company still seems to be going over well with Wall Street — especially when it comes to its big focus on Azure, its cloud services.

Azure’s growth slowed slightly, but in the scope of Amazon and Google — which are fighting it out with Microsoft for more and more clients — it’s one of the main drivers of Microsoft’s growth these days. Things grow, the stock goes up, Microsoft is still doing stuff, etc.

Also, LinkedIn seems to be doing quite well.

7/12

Jeff Bezos is no longer unfathomably rich (just very, very rich)

The verdict: whiff

Amazon CEO Jeff Bezos’ very short stint as the Solar System’s richest human ended abruptly after the company reported its second-quarter earnings. Amazon said the company might swing to a loss after several quarters of showing some real results as it continues to massively expand its business.

It was definitely a busy one for Amazon — including a massive $13.7 billion bid for Whole Foods. But Amazon’s cloud services continue to be a bright spot, and in reality may be the main driver for Amazon’s profits given its very healthy operating margin.

Photo by Joby Sessions/T3 Magazine via Getty Images

8/12

Netflix blows away Wall Street

The verdict: beat (and how)

Netflix tends to be graded on its subscriber growth, and it most certainly delivered a great performance this quarter on that front. The stock jumped 9% after the company said it added more than 5 million new subscribers, handily beating the projections it set itself and also the ones Wall Street expected.

This is Netflix’s second big subscriber surge — so it may be that CEO Reed Hastings is the next big CEO to continue the time-honored tradition of finding ways to sandbag Wall Street.

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9/12

Yelp offloads Eat24

The verdict: slimming down

Yelp normally isn’t the kind of company that you’d watch very closely (unless you’re that analyst that you’ve been assigned to cover). But this time around there was some big news in that it is selling off its Eat24 delivery business to GrubHub in exchange for a sort of partnership.

Yelp, which has not had a great run in a while, saw the stock jump more than 20% after it announced the deal. Its actual results were not too bad as well. Yelp is basically a critical service, albeit not an overwhelmingly large one, and it seems like there may yet be signs of life in the company.

10/12

Tesla gets a big boost from the Model 3

The verdict: not too bad

Tesla posted a better-than-expected second quarter. But more importantly, the company signaled that the rollout of the Model 3 may not actually have a negative impact on the growth of its other, more premium cars: the Model S and Model X.

Tesla also said it is averaging around 1,800 Model 3 reservations per day after beginning its first handovers of the vehicles. As usual, Tesla really was graded on its potential and future, and the stock jump following that represented the typical Elon Musk bump.

11/12

Pandora (sort of) bounces back

The verdict: beat (initially)

Following a very chaotic quarter, Pandora released an earnings report that showed better-than-expected results and was at the time awarded a nice stock pop. There was plenty of drama: the CEO had stepped down, it sold Ticketfly at a loss, thought for a minute about selling a stake to KKR and then finally ended up taking a big investment from SiriusXM.

Of course, the course of the earnings call, Pandora pulled a Pandora and saw that stock bump come back down to earth. The company still faces many systemic issues, and while it received a big investment and an outright sale may be off the table, there’s still a lot of uncertainty going forward.

12/12

OVERTIME: Blue Apron drops off a cliff

The verdict: very bad

Blue Apron has a laundry list of obstacles in front of it. The biggest problem is the specter of Amazon, which spent $13.7 billion to buy whole foods and (almost seemingly intentionally) continues to show signals that it will charge into the niche that Blue Apron has carved out for itself.

The stock dropped another 14% after the report, where it was able to show some small signs of improvement in its business as it starts to pull back on marketing. The company also forecast a big loss for its next quarter, demonstrating that it might still have some major issues going forward.

Photo by Scott Eisen/Getty Images

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