The trade in technology stocks is getting more difficult. The mega-cap tech names known collectively as the “Magnificent Seven” lost a combined $1 trillion of value amid the global market rout that occurred on August 5. Chipmaker Nvidia (NASDAQ:NVDA) lost $168 billion in market capitalization as its stock fell 6.4%, while Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) ended down 4.8% and 4.1% respectively on the day. As you can see, market volatility is impacting even the biggest names, helping identify the top tech stocks to sell after earnings.
However, the declines are more broad-based, with many technology stocks suffering losses since the beginning of July when investors began rotating money out of tech names and into value and small-cap securities. That rotation has only worsened amid rising fears that the U.S. economy is headed for a recession and as many well-known technology companies report poor second-quarter financial results.
It’s a big reversal from this year’s first half when technology stocks led the market rally as investors bet on the hype surrounding artificial intelligence (AI). Here are three tech stocks to sell after earnings.
Super Micro Computer (SMCI)
Not even a 10-for-1 stock split could paper over Super Micro Computer’s (NASDAQ:SMCI) horrible second-quarter financial results. SMCI stock is down 18% in the last five days, as the company reported EPS of $6.25, missing Wall Street’s target of $8.07. Revenue totaled $5.31 billion, which was only marginally better than the $5.30 billion that was forecast.
Perhaps worst of all, Super Micro Computer said that its gross margin dropped to 11.2% in Q2 from 17% a year earlier. A lower margin means the company is earning less profit on each product it sells. The company’s forward guidance was nothing to write home about either. A Q3 earnings outlook of a $7.48 midpoint fell below consensus estimates of $7.58.
As for the stock split, it’s due to occur on October 1. But with the stock down 60% from its 52-week high and trading under $500 a share, is a split even needed? SMCI stock has fallen 45% since the start of July, making it a tech stock to sell after earnings.
Airbnb (ABNB)
Almost as bad as the Q2 print delivered by Super Micro Computer was the one from Airbnb (NASDAQ:ABNB). Shares of the company plunged 15% after management reported Q2 earnings that missed Wall Street’s target. Airbnb reported EPS of 86 cents, which was below the consensus forecast among analysts of 92 cents.
Revenue of $2.75 billion slightly beat estimates of $2.74 billion, and sales were up 11% from a year earlier. However, the outlook provided on the earnings call sunk the stock. Specifically, management warned that it anticipates some moderation in its year-over-year bookings during the current third quarter. They cautioned that they are seeing “…some signs of slowing demand from U.S. guests.”
Investors are carefully watching for signs that consumers are pulling back on spending amid mounting evidence that the U.S. economy is slowing and might be headed for a recession. ABNB stock is down 22% in the last 12 months.
Coinbase (COIN)
Cryptocurrency exchange Coinbase (NASDAQ:COIN) reported great financials for Q1 when Bitcoin (BTC-USD) prices were at an all-time high. But that was then, this is now. For the second quarter, Coinbase announced decidedly mixed financial results amid a slump in cryptocurrency prices and trading demand. Specifically, Coinbase posted EPS of 14 cents, which badly missed Wall Street consensus targets of 94 cents.
Revenue of $1.45 billion did exceed the average analyst estimate of $1.37 billion. However, sales in Q2 were down 27% from the previous quarter. The company said that its results suffered due to a decline in trading volumes and losses on its crypto assets. Management said trading activity on its exchange has been subdued with crypto prices slumping and range bound over the past few months. COIN stock has fallen 20% since its Q2 print was made public 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 writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor held a LONG position in NVDA.