Tesla’s prayer for profit, profit tests for Intel and Microsoft highlight first big week of profit contaminated with coronavirus

So far, the results have been appalling. S&P 500 components posted a 47.4% decrease in second-quarter earnings with almost 9% of reports issued. Analysts model a 44% decrease in earnings for the index as a whole, taking into account the results and estimates already reported for the rest. That would mark the biggest annual drop in earnings since the fourth quarter of 2008, when earnings fell 70%.

See more: S&P 500 earnings plummet as coronavirus hits all sectors, with Wall Street counting on a rebound that may not come

Tech giants Intel and Microsoft are on a better path as they both likely benefited from the stay-at-home trends during the coronavirus pandemic that fueled increased demand for remote work equipment and services and are expected to increase profits by action while recording slight falls in net income. Positive surprises could help the S&P 500 aggregate performance, as larger companies are more influenced by the index. Microsoft reports the results Wednesday afternoon and Intel follows it a day later.

Tesla is expected to show red ink for the second quarter, according to FactSet estimates, although analysts predict a smaller loss than a year ago. Some are still hopeful that the company may post a surprise GAAP profit and help land Tesla in the S&P 500, which requires four consecutive quarters of profitability to enter; Tesla has been profitable the past three quarters.

Other key names in the coming week include battered airlines United Airlines Holdings Inc. UAL,
-1.65%
and Southwest Airlines Co. LUV,
-0.23%,
social media players Twitter Inc. TWTR,
+ 1.50%
and Snap Inc. SNAP,
+ 2.67%,
as well as Chipotle Mexican Grill Inc. CMG,
+ 0.59%
Here are some topics to see.

Tesla’s next test

Tesla smashed second-quarter delivery expectations, providing more ammunition for the stock’s strong 2020 rally, and now the company faces another test as it reveals the financial impact of COVID-19 on its business.

Read: Tesla earnings on tap next week. Will your comeback end a loss?

Optimistic delivery numbers suggest that consensus financial forecasts may be too conservative, wrote Barclays analyst Brian Johnson. He was already forecasting a GAAP profit of $ 4.2 million prior to the delivery announcement, and since then his estimate has reached $ 42 million. The FactSet consensus currently calls for a loss of $ 53 million.

Phone calls

AT&T Inc. T,
-0.46%
and Verizon Communications Inc. VZ,
+ 0.93%
They are set up to show how smartphone buying trends have evolved during the pandemic. Both companies saw the equipment revenue tank towards the end of the March quarter as stores closed due to COVID-19, but analysts are optimistic that things are improving now that social distancing restrictions have eased.

Even with these challenges, the wireless business should remain a bright spot for AT&T, dealing with movie production stops for its Warner Bros. business, weak advertising for its media channels, and an avalanche of outages on DirecTV. AT&T numbers are due Thursday morning, followed by Verizon the next day.

Flight risk

After Delta Air Lines Inc. DAL,
-0.77%
delivered a loss of $ 5.72 billion for the June quarter and warned that a “sustainable recovery” appears to be more than two years away, United and Southwest are on deck.

United’s comments will be especially worth watching as Helane Becker of Cowen & Co. said the company has been “most forthcoming with information about the reality of the pandemic” and “more correct than incorrect” during the crisis . It will search for information on planned staff reductions and capacity changes. “United has been the bleakest of the situation and its capacity plans have followed suit,” Becker said. Winnings will be received on Tuesday afternoon with a call the next morning.

For Southwest on Thursday morning, Becker is interested to see if the company will use the recession as an opportunity to gain share as it has in the past.

Social studies

Twitter will take on investors on Thursday morning, just over a week after the company suffered a troubling security breach that allowed hackers to access numerous major Twitter accounts for what appeared to be a bitcoin scam. . The company is still investigating the incident and the administration will surely face tough questions about Twitter’s privacy and security mechanisms. Stifel’s John Egbert hopes Twitter will further increase its security spending.

Twitter and Snap should shed light on the state of the ad market during the pandemic. Egbert predicts Snap’s revenue growth slowed from the first quarter to the second quarter, but is still looking for double-digit ad growth relative to the previous year given the “growing appetite” for direct response ads. from Snap. Snap reports Tuesday afternoon, followed by Twitter Thursday morning.

Food for thought

As some states take a tougher stance on indoor dining, Chipotle will seek to emphasize its digital prowess on Wednesday afternoon. Third-party data on app downloads and loyalty logs suggest a “long-term increase in engagement,” wrote Gregory Frankfurt of Bank of America. He said the company appears to be “managing better through COVID than we expected,” although he is still concerned about the economics of delivery.

A whole week of the Dow.

There is at least one Dow component in the program every day of the following week, starting with International Business Machines Corp. IBM,
+ 0.88%
Monday afternoon, Coca-Cola Co. KO,
+ 1.45%
Tuesday morning and Microsoft on Wednesday afternoon. Travelers Cos. Inc. TRV,
-1.11%
and Dow Inc. DOW,
-0.36%
follow Thursday morning, with Intel that afternoon, and American Express Co. AXP,
-1.18%
and Verizon complete the week on Friday morning.