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The 2 High-Growth Stocks Everyone Will Be Talking About Friday

By Dan Caplinger – Jul 29, 2021 at 5:16PM

Key Points

  • Stock markets moved higher on Thursday as investors were generally positive about future economic prospects.
  • Earnings season continued, bringing more results to investors' attention.
  • Two stocks in particular have the potential to move markets on Friday.

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The stock market did well on Thursday, but some choppy waters could lie ahead.

The stock market moved higher on Thursday, with investors seeing the bright side of earnings season. Gains were sharpest for the Dow Jones Industrial Average (^DJI -0.53%), but the S&P 500 (^GSPC -0.72%) was only a little bit behind while the Nasdaq Composite (^IXIC -0.70%) came up with the smallest gains.

Index

Percentage Change

Point Change

Dow

+0.44%

+154

S&P 500

+0.42%

+19

Nasdaq Composite

+0.11%

+16

Data source: Yahoo! Finance.

Earnings reports kept pouring in, giving investors different views of how various businesses are doing. A couple of high-profile growth stocks reported their results today, and their share prices fell sharply in after-hours trading. Below, we'll take a closer look at what sent shares of e-commerce pioneer Amazon.com (AMZN 1.09%) and social media disruptor Pinterest (PINS -1.10%) sharply lower late Thursday.

Amazon falls short

Shares of Amazon.com were down about 1% in the regular session. However, the stock fell more than 5% after hours following its release of second-quarter financial results.

At first glance, Amazon's numbers seemed quite healthy. Net sales jumped 27% during the quarter to $113.1 billion. Net income soared by roughly 50% year over year to $7.8 billion, working out to $15.12 per share. The company reported 250 million items purchased during the latest Prime Day event, easily eclipsing results from previous years.

Tiny shopping cart filled with boxes on top of a keyboard.

Image source: Getty Images.

Yet investors didn't seem satisfied by the extent of Amazon's gains, and they absolutely didn't like the guidance the company gave for the third quarter. Amazon projected revenue of $106 billion to $112 billion for the third quarter, which would represent a sequential decline and a year-over-year gain of just 10% to 16%.

Some have feared that Amazon would suffer when the economy reopened, and that seems to be consistent with what the company itself is projecting. That said, Amazon has defied naysayers before, so it's too early to count on the e-commerce giant just yet.

Pinterest gets pinned

Meanwhile, shares of Pinterest took a double-hit on Thursday. After falling 6% in the regular session, the social media company's stock saw an even bigger 16% drop after hours.

Again, Pinterest's numbers generally looked stellar on their face. Revenue soared 125% year over year to  $613 million. The company reversed a year-ago loss with adjusted net income of $170 million, working out to $0.25 per share. Although user growth slowed to just 9%, average revenue per user was sharply higher, doubling both in the U.S. and internationally.

Yet Pinterest also cited an uncertain future in its guidance. The social media company believes revenue growth will slow to about 40% in the third quarter, and it said that reduced user growth has continued in July. U.S. monthly active user counts actually fell in the second quarter, and those declines accelerated in July.

Investors had high expectations for Pinterest coming into the quarterly report, so it's not terribly surprising to see the stock pull back after releasing results that weren't able to get over a high bar. What's important going forward is that Pinterest continue to attract new users and then monetize them more effectively to keep revenue and profits moving higher.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Dan Caplinger owns shares of Amazon and Pinterest. The Motley Fool owns shares of and recommends Amazon and Pinterest. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Amazon Stock Quote
Amazon
AMZN
$94.43 (1.09%) $1.02
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$34,164.48 (-0.53%) $-182.55
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,997.07 (-0.72%) $-29.05
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$11,147.68 (-0.70%) $-78.93
Pinterest Stock Quote
Pinterest
PINS
$24.71 (-1.10%) $0.28

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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