Two of 2020’s hottest companies will try to keep their momentum alive as the revenue reporting season goes into high gear next week.
Netflix Inc. NFLX
has been one of the biggest beneficiaries of the COVID-19 crisis as more people flocked to streaming services amid quarantine measures and a lack of traditional new TV programming in the first half of the year. Now the question is whether the easy growth is in the past.
After adding nearly 27 million new paying subscribers in the first six months of 2020, Netflix warned investors to do something about a downturn. Analysts expect only 3.8 million new paid subscribers in the third quarter when Netflix reports results Tuesday afternoon. That would mark the lowest quarterly pickup in more than a year.
There is more to Netflix than subscriber growth, and some analysts are positive on other parts of the company̵
Full Preview: Is Netflix Raising Prices in the US? Recent actions suggest that this could happen
The COVID-19 pandemic has not been as kind to Tesla Inc. TSLA,
to force factory shutdowns earlier this year, but you would not know that by looking at its stock, which has so far risen more than 400% higher by 2020. Although Tesla is unable to reach its previously stated sales target of 500,000 vehicles in I during 2020, investors can blame the lack of the pandemic and give the company a pass, according to CFRAs Nelson Garrett.
A key question for Tesla’s earnings call on Wednesday afternoon is how corporate demand is holding up. According to Bernstein’s analyst Toni Sacconaghi, Tesla delivered 124,100 Model 3 and Y vehicles combined in the third quarter despite having the capacity to produce at least 150,000. This utilization rate was less “than what we have seen in previous quarters, begging the question of whether demand or production was the constraint,” he wrote.
Full view: Investors ask if Tesla’s sales guidance is intact
Netflix and Tesla highlight the busiest earnings reporting so far this quarter with 84 members of the S&P 500 SPX
and eight Dow Jones Industrial Average DJIA
components due to report this week. Here are some other important themes.
Intel Corp.s INTC
Thursday afternoon’s report follows a disappointing view three months back when the company revealed a delay for its next generation of chips and said it might look for a third party to manufacture them.
In-depth: How did Intel lose its Silicon Valley crown?
Intel executives will seek to restore confidence this time around, and Wedbush analyst Matt Bryson argued that the company “should no doubt exceed expectations” after issuing a forecast that he considered conservative. The company could also benefit from improved PC and car demand, but it remains to be seen how much insurance the company will be able to provide on its long-term roadmap.
Colleague chipmaker Xilinx Inc. XLNX
reports Wednesday. Its results will be in focus more now that Advanced Micro Devices Inc. AMD
is reportedly interested in buying the company.
For more: An AMD-Xilinx deal would be fraught with risk
Telecommunications competes with Verizon Communications Inc. VZ
and AT&T Inc. T
may provide some early indications of iPhone demand when reporting Wednesday morning and Thursday morning, respectively. Pre-order for Apple Inc.’s AAPL
iPhone 12 and iPhone 12 Pro began Friday.
For more: 5G iPhone resumes subsidy wars
The two companies were also able to shed light on their promotional strategies for this year’s launch. AT&T in particular took an aggressive approach to offering $ 800 in billing credits to both new and existing customers trading in an iPhone 8 or a newer model. Verizon’s most attractive deal also comes out at a $ 800 subsidy, an analyst said, but it was limited to new subscribers.
AT & T’s existing subscriber campaign can help the company retain subscribers at a time when competitor T-Mobile US Inc. TMUS
improves the quality of its network, but history has shown that generous subsidies do not necessarily pay off for airlines when the whole industry offers the same kind of offers.
After United Airlines Holdings Inc. UAL
and Delta Air Lines Inc. VALLEY
reported heavy losses and warned of prolonged recovery schedules due to the pandemic, Southwest Airlines Co. LUV
and American Airlines Group Inc. EEL
will give their own views on the situation Thursday morning. “Southwest’s main goal is to avoid furloughs, but that seems unlikely,” wrote Cowen & Co. analyst Helane Becker.
An even more terrifying view of the travel landscape could come from the Royal Caribbean Group RCL,
which has sailing on hold in almost any market. The company is optimistic about seeing sailings resume later this year, but William Blair analyst Sharon Zackfia sees uncertainty in timing and expects Royal Caribbean to have fourth-quarter capacity at 5% with an occupancy rate of 50%.
International Business Machine Corp. IBM
already announced in-line preliminary results for the September quarter, but Morgan Stanley’s Katy Huberty said it stands in contrast to “improving data points for IT spending.” She expects the company to continue to lag behind peers as technology spending returns, and she is particularly focused on trends in the company’s cloud and cognitive software companies when IBM reports Monday afternoon.
IBM earnings: The CEO’s first major move will be examined more than the numbers
Snap Inc. SNAP
accompanies its report on Tuesday, and its report will serve as the first signal of social media advertising trends. Stifel analyst John Egbert expects the company’s revenue growth to “accelerate significantly” from second-quarter levels as demand for ads recently declined. “Despite a thin feature film slate in recent months, data / anecdotes from major agencies and advertisers about directional trends in the advertising market have been largely positive since August,” he wrote.
Here comes the Dow
IBM’s Monday report starts a packed week of earnings earnings for shares of the Dow Jones Industrial Average. Procter & Gamble Co. PG
and Travelers Cos. Inc. TRV
both report Tuesday followed by Verizon Wednesday morning. Coca-Cola Co. COW
and Dow Inc. DOW
is scheduled for Thursday morning with Intel that afternoon. American Express Co. AXP
rounds off the week Friday morning.