Despite the fact that Big Tech’s day in the antitrust spotlight is delayed, next week will be a great test for the biggest names on Wall Street.
Parent company of Google Alphabet Inc. GOOGL,
GOOG,
, Amazon.com Inc. AMZN,
Apple Inc. AAPL,
and Facebook Inc. FB,
everyone will report calendar second quarter earnings within 24 hours of each other on Wednesday and Thursday.
That’s only part of the busiest week of this earnings season, as 180 other companies on the S&P 500 SPX index,
They are also slated to reveal how the COVID-19 pandemic has affected their finances.
Read: House official confirms Big Tech hearing for July 27 has been postponed
All four Big Tech names combine for more than $ 5 trillion in market value, as investors have poured money into their stocks looking for some form of security during the pandemic. While the Americans who fled there have relied on their services to stay connected during the pandemic, there are still concerns about how they will cope with the economic symptoms of the coronavirus.
Facebook will lead things on Wednesday afternoon, amid a broad boycott of advertisers and questions about the health of the overall online ad market. Twitter Inc. TWTR,
and Snap Inc. SNAP,
revealed troubling trends in social ad purchases as early as this earnings reporting season, and Facebook faces more complications than those two.
On Thursday afternoon, Alphabet will give another read on the online advertising market with its report, which will focus on search advertising. Microsoft Corp. MSFT,
He reported a large decline in his search advertising business suggesting that Google may have had a difficult patch, although YouTube and the Google Cloud business may mask some negative effects.
Amazon and Apple are also expected to report Thursday, testing their more than $ 1 trillion valuations. Apple’s forecast could give clues to the launch of the next iPhone and detail how store closings could change iPhone shopping habits, while Amazon hopes to see a huge increase in revenue, but spend any profit as fast as it can raise it. in the continuous growth of the workforce and logistics improvements
Even if those tech companies manage to exceed expectations, the overall picture remains bleak. The S&P 500 is on track to post its worst quarter of earnings growth since the fourth quarter of 2008. The 127 index members who have reported earnings so far have seen a 43.2% decrease in aggregate earnings, and analysts surveyed by FactSet expect a 42.4% drop in earnings once all reports are in
Despite the carnage of earnings, companies have overwhelmingly exceeded expectations, though those rates are not driving large stock movements, likely due to how far estimates have dipped due to the pandemic. According to JP Morgan, more than 80% of companies reporting so far have exceeded earnings per share expectations.
At the same time, companies that exceeded expectations in both revenue and profit have only outperformed the market by 1.2% on average, according to Credit Suisse chief credit strategist Jonathan Golub. The historical average is 1.6%, he said. Those who did not reach the estimates in both metrics have lagged behind in the market by an average of 0.7%, while a return of less than 3.1% is the historical average.
Shopping cart
In addition to Amazon, many other companies will shed light on the state of e-commerce amid the pandemic. EBay Inc. EBAY,
reports Tuesday afternoon and Wedbush analyst Ygal Arounian hope the company can capitalize on the broader wave of e-commerce adoption to drive “sustainable buyer growth” on the platform.
Read: EBay says it will ‘move pretty fast’ in payment transition as PayPal deal expires
Another Tuesday reading on e-commerce comes from Visa Inc. V,
It will balance strong online volume trends with a weak backdrop for travel expenses and ongoing restrictions on in-person business. Mastercard Inc. MA,
offers a similar story on Thursday morning, while PayPal Holdings Inc. PYPL,
offers a purer read on the e-commerce landscape on Wednesday afternoon.
Still punished
Boeing Co. BA,
It is in another difficult quarter when the COVID-19 crisis pressures the aerospace landscape. The company reported only 20 commercial deliveries in the June quarter, below the estimate by RBC Capital Markets analyst Michael Eisen, 36, but said the figures appeared to be “an indication that the worst of the headwinds was the production associated with MAX and COVID-19 grounding are probably behind us. “
Executives will seek to reassure investors about the long-term plan on Wednesday morning, but that will require looking beyond what Seth Seifman estimates from JP Morgan could be a $ 6 billion cash loss for the June quarter. .
Share
Tesla Inc. TSLA,
posted a surprise GAAP profit last week, but analysts expect big losses for fellow automakers General Motors Co. GM,
and Ford Motor Co. F,
Goldman Sachs analyst Mark Delaney is still encouraged by “improving data points” for Detroit auto companies and believes that both companies could benefit from a greater mix of pickup trucks and sport utility vehicles, which he says have margins. that are above the corporate average.
“We believe that the recent acceleration [in the shift toward pickups and SUVs] is due to factors including consumer preference for towing capabilities (including recreational vehicles) and also the relationship between truck sales and home starts, “he wrote ahead of the GM report Wednesday morning and Ford Thursday afternoon.
Vital signs
Pfizer Inc. PFE,
and Gilead Sciences Inc. GILD,
They are among the top health names slated to report in the coming week, as investors seek more information about companies working on COVID-19 vaccines and treatments.
Pfizer is developing a vaccine with BioNTech, and the companies recently announced a deal that would allow the United States government to pay $ 1.95 billion for 100 million doses of the vaccine. That equates to $ 19.50 per serving, though Vamil Divan of Mizuho said it is unclear how prices will evolve in the future based on demand and the competitive landscape.
“We expect considerable attention in the call about the continued progress they are making with the vaccine, although given the recent run on the stock we will also be looking for additional color in their ‘Trailblazer’ pipeline assets that may currently be underestimated on the street,” he wrote ahead of the company report on Tuesday morning.
With Gilead, look for clues to the company’s remdesivir drug and how it will affect finances now that the government has issued an emergency use authorization for the drug to be used in the treatment of some seriously ill patients with COVID-19.
Barclays analyst Carter Gould said the margins for the drug are unlikely to match the company’s overall margins, but investors will likely have to make their own calculations based on the company’s more general financial disclosures to deduce how remdesivir fits. Be “very surprised if the company details specific remdesivir projected gross margins” in the Thursday afternoon call.
Read: Gilead says remdesivir of coronavirus drug may reduce risk of death, but analysts need more evidence
12 Dow components
A full week for the Dow Jones Industrial Average includes five reports on Tuesdays: 3M Co. MMM,
Pfizer, Raytheon Technologies Corp. RTX,
and McDonald’s Corp. MCD,
in the morning, and Visa after the closing bell. Boeing is the only name slated for Wednesday, while Procter & Gamble Co. PG,
And Apple wrote down the board on Thursday. Chevron Corp. CVX,
Exxon Mobil Corp. XOM,
Caterpillar Inc. CAT,
and Merck & Co. Inc. MRK,
complete the week on a busy Friday morning.
.
