Qualcomm Incorporated delivered a fourth-quarter earnings beat Wednesday, but shares fell anyway, creating the type of price volatility that single-stock ETFs are designed to capture.
The chipmaker reported earnings per share of $3.00 versus expectations of $2.88 and revenue of $11.27 billion compared to the $10.79 billion analysts anticipated, according to CNBC. Despite the beat, shares closed nearly 4% lower Thursday as the company said it expects to lose Apple Inc. as a customer for its modem business in coming years.
“Qualcomm beat expectations across the board and guided well ahead of consensus, but the stock’s muted reaction shows how high the bar had become after weeks of AI-fueled gains,” said Jake Behan, Direxion’s head of capital markets.
The Direxion Daily QCOM Bull 2X ETF (QCMU) fell 7.6%, while the Direxion Daily QCOM Bear 1X ETF (QCMD) rose 3.6% by Thursday close following the earnings release, according to ETF Database data.
“Traders using QCMU and QCMD now have a clean setup: a fundamentally strong company, a high bar for sentiment, and short-term volatility to capture,” Behan said.
QCMU provides 2x leveraged exposure to daily price movements of Qualcomm shares while QCMD offers inverse exposure, according to ETF Database. Both funds carry a 0.97% expense ratio and launched June 25.
Diversification Efforts Show Progress
Revenue rose 10% from $10.24 billion a year earlier, with the company guiding first-quarter revenue between $11.8 billion and $12.6 billion, exceeding analyst estimates of $11.62 billion, CNBC reported.
“This quarter showed Qualcomm is still delivering steady handset growth while beginning to make credible moves into newer markets like automotive and AI, the balance investors are watching closely,” Behan said.
The handset business generated $6.96 billion in revenue, up 14%, while automotive sales increased 17% to $1.05 billion, according to CNBC. The Internet of Things division, which includes Meta Platforms Inc. revenue, posted $1.81 billion in sales, up 7%.
“As we’ve seen throughout this earnings season, traders have grown increasingly reluctant to push stocks higher, even on strong results,” Behan said.
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