GM and GE Rise on Solid Earnings; Spotify Tumbles

The Q2 earnings season is in full swing with Tuesday being one of the busiest days of this period. As of Friday, around 18% of S&P 500 companies reported actual results, according to FactSet.

Their data shows that 75% of S&P 500 companies have reported a positive EPS surprise so far, while 61% of S&P 500 companies have reported a positive revenue surprise. However, the S&P 500 earnings decline has been larger-than-expected – a -9% vs the expectations of -7%.

This week will also see mega-cap giants like Microsoft (MSFT:US), Meta Platforms (META:US), and Alphabet (GOOGL:US), report their Q2 results.

In this blog post, we look at the most important earnings reports published on Tuesday morning EST.

General Motors Beats

The company topped analyst expectations for the second quarter after reporting adjusted EPS of $1.91 on revenue of $44.75 billion. Sales surged 25% year-over-year, boosted by the 26% jump in the core business unit – Automotive. 

As a result, General Motors (GM:US) boosted its net income forecast for the full year. It now sees a net income of $10 billion, up from the prior forecast of $9.15 billion. Adjusted Ebit is now seen at $13 billion, up from the prior forecast for $12 billion.

GM also said the results include a $792 million charge for new commercial agreements GM has with LG Electronics and LG Energy Solution.

“The biggest driving force behind our financial results is customer demand for our vehicles, which have now led the U.S. industry in initial quality for two consecutive years. We have earned four consecutive quarters of higher retail market share in the U.S. versus a year ago with continued strong pricing and incentive discipline, we’re leading in both commercial and total fleet deliveries calendar year to date, and we’re growing profitably in international markets such as Brazil and Korea,” CEO Marry Barra said in a letter to shareholders.

Last week, Congressman Bill Keating disclosed he was a buyer of GM corporate bonds in late June.

GM stock was trading modestly higher in early Tuesday trading.

General Electric Tops Estimates

Similarly, General Electric (GE:US) also reported stronger-than-expected second-quarter results, paving the way for the industrial giant to boost its full-year profit forecast.

For Q2, the company reported an adjusted EPS of $0.68 on revenue of $15.9 billion. Organic revenue rose 19% to help the company top analyst expectations by over $1.1 billion. General Electric said orders stood at $22 billion at the end of Q2.

"GE's second-quarter performance was strong, building on our first-quarter momentum and marking a solid first half of the year,” CEO H. Lawrence Culp, Jr. commented. “Orders and revenue grew double digits, led by robust services growth across our portfolio, increased demand at GE Aerospace and record Renewable Energy orders. Today, we are raising our full-year guidance as market strength and the lean transformation within our more focused businesses drive significant profit and cash improvement across GE.”

The company now sees full-year adjusted EPS at $2.2, up from the prior forecast of $1.85, and above the consensus of $2.05. GE also boosted its FY FCF guidance to a range of $4.1 billion to $4.6 billion, up from the prior $3.6 billion - $4.2 billion range.

The company’s stock rose about 4% on the Q2 outperformance and guidance raise. Rep. Michael McCaul was selling the stock on May 10, when it closed at $99.54. This way, he capitalized on the rise in GE stock as he was a buyer of shares earlier this year when they raided below $80 apiece. 

Spotify Falls on Weak Revenue

Spotify (SPOT:US) shares were trading lower in early Tuesday trading after the Swedish company offered a lower-than-expected outlook for the current quarter.

Spotify said it expects to incur an operating loss of €45 million on revenue of €3.3 billion for the third quarter. Analysts were expecting a loss of €83.6 million on revenue of €3.42 billion. 

The number of monthly active users (MAUs), on the other hand, is seen hitting 572 million, easily ahead of the Street at 548 million. 

The softer-than-expected Q3 revenue outlook comes after the company reported its sales rose 11% in Q2 to €3.18 billion, missing the consensus of €3.21 billion. Spotify had 551 MAUs at the end of Q2, crushing the consensus of 529.9 million.

On the bottom line, the loss per share totaled €1.55, significant underperformance relative to market expectations for a loss of €0.65 per share. 

“Overall, we are encouraged by the strength we saw in Q2 and our momentum heading into the back half of 2023,” the company said in an update.

Congressman Ro Khanna was actively trading SPOT shares throughout last year.