Stocks logged solid gains on Thursday as both the Dow Jones Industrial Average (^DJI 0.41%) and the S&P 500 (^GSPC -0.95%) pushed further into record territory, rising more than 0.5%.
Today's stock market
|
Index |
Percentage Change |
Point Change |
|---|---|---|
|
Dow |
0.59% |
118.06 |
|
S&P 500 |
0.58% |
13.20 |
Data source: Yahoo! Finance.
Financial stock funds and gold funds moved in opposite directions, with the Financial Sector SPDR Select ETF (XLF 1.22%) rising 1.37% as the Direxion Daily Gold Miners Bull 3X ETF (NUGT 1.99%) dropped more than 7%.
Image source: Getty Images.
Many individual stocks attracted heavy investor interest in the wake of quarterly earnings reports, and two of the biggest movers were Twitter (TWTR) and Coca-Cola (KO 2.19%).
Twitter's revenue growth
Twitter shares dropped 12% following a mixed fourth-quarter report. The good news is the social media company managed its third consecutive quarter of accelerating audience growth, as daily active users rose 11% year over year compared to a 7% boost in the prior quarter.
Also encouraging was the fact that its focus on live-streaming video is delivering impressive engagement. Twitter streamed more than 600 hours of content to 31 million viewers last quarter through initiatives like its promotion with the National Football League. The live video outlet is ideal for Twitter, executives explained in a shareholder letter, because it "drives conversation, connection, and engagement...reinforcing our position as the best and fastest place to see what's happening in the world and what people are talking about."
The bad news is that the company struggled at monetizing that user engagement. Revenue growth slowed to a 1% pace as advertising sales declined. CEO Jack Dorsey and his team see that pressure continuing into the current year as competition eats at sales and profit growth in the digital ad market. Twitter still hopes to reach overall profitability this year, but a slumping advertising business threatens to complicate that effort.
Coca-Cola's volume trends
Coke sat out the day's rally after its fourth-quarter earnings report failed to excite investors. The beverage giant met management's expectations as earnings dove 55% to $0.13 per share. Its case volume growth, however, worsened to a 1% decline from the prior quarter's 1% uptick. Executives explained that a demand uptick in developed markets like the U.S. and Western Europe was mostly offset by drops in Latin America. "We are pleased to report that we ended 2016 with fourth quarter top- and bottom-line growth within our expectations," CEO Muhtar Kent said in a press release.
Coke is focused on revamping its products in response to rapidly shifting consumer tastes. In fact, it is tinkering with more than 200 formulas in a bid to move away from ingredients that shoppers are rejecting, especially sugar. That initiative will be James Quincey's priority when he takes over the CEO spot from Kent on May 1.
Image source: Getty Images.
In the meantime, investors should expect to see a fiscal 2017 that looks a lot like the year that just closed. Organic revenue growth should be around 3%, executives projected, as the company expands just a hair faster than the overall industry. Coke's profitability will likely improve as it raises average prices and reaps financial benefits from its cost-cutting efficiency programs.
Over the longer term, management is hoping that its refranchising initiative, set to conclude this year, will deliver a more profitable enterprise at the expense of significant sales growth.
