Earnings season had been going smoothly during the last two weeks as all three major indexes had made significant gains, but today, big names, including Amazon.com (NASDAQ:AMZN), sank following their quarterly reports, taking the market down with them. Rising tensions in Ukraine also weighed on equities as the U.S. prepared to add another round of sanctions against Russia. By the end of the session, the Dow Jones Industrial Average (DJINDICES:^DJI) finished down 140 points, or 0.9%, while the S&P 500 dropped 0.8%, and Nasdaq tumbled 1.8%.
In today's economic news, the University of Michigan reported that consumer confidence hit its highest level since July 2013, rising to 84.1, up from 80 in March, and beating estimates at 82.6. The survey's reading of current economic conditions rose to 98.7, its best mark since July 2007. The report is just the latest piece of data indicating that the economy is returning to pre-recession levels of strength as it recovers from poor winter weather.
After gaining slightly in after-hours trading following its earnings release last night, Amazon.com shares finished today's session down 10% in an odd swing as analysts weighed in on the stock this morning. Many were frustrated by a continuing lack of meaningful profits, as well as the company's weak guidance for the current quarter, for which it sees an operating loss. At least a dozen analysts lowered their ratings or price targets, and the stock is now down more than 25% from its peak earlier this year, as it fell by about the same amount in its previous earnings report. Strangely, the company's report last night was typical for the retail giant with sales growing 23%, ahead of expectations, and EPS at $0.23. Amazon also continues to innovate, adding new features for customers such as HBO shows for its streaming catalog, and a grocery delivery service it's calling Prime Pantry. The rub with the online behemoth is its valuation and, with slowing growth and negligible profits, the price seems likely to return further within the earth's gravitational pull.
Also plummeting today was Pandora Media (NYSE:P), whose shares finished down 16.6% after its earnings report last night. Active listener growth slowed for the Internet DJ, increasing just 8%, to 75.3 million, short of expectations, and listener hours improved only 12%, to 4.8 billion. Despite the slow listenership growth, revenue surged ahead, climbing 54% to $180.1 million as the company has shifted from driving listener growth to monetizing its audience. That figure easily beat analyst estimates at $174.9 million, and its bottom-line performance also topped the experts' view by $0.01, coming in at a per-share loss of $0.13. Still, the stock got punished because Pandora's outlook for the current quarter was weak. The online radio service sees EPS of breakeven to $0.03 and revenue at $218 million against estimates of $0.05 per share and $219.3 million in sales. Pandora's full-year guidance was in line, but long-term profitability concerns seem valid with listener growth fading, and a forward P/E of more than 100.
Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com and Pandora Media. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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