Earnings Watch: In the next week, Wall Street will focus on Netflix stock and Tesla’s demand concerns and Snap’s unclear online advertising landscape.
Streaming behemoth Netflix Inc. (NASDAQ:NFLX) and electric-vehicle manufacturer Tesla Inc., (NASDAQ:TESLA) two companies that have exemplified Wall Street’s boom in the last ten years, will try to reverse some recent negative trends as earnings season shifts into high gear this week.
Netflix Stock (NFLX) and Other Top Stocks
Following rising costs and JPMorgan Chase & Co., Delta Air Lines Inc. and JPM DAL set the tone for this week; Wall Street will focus on Netflix (NASDAQ:NFLX) and Tesla TSLA’s quarterly earnings on Tuesday and Wednesday, respectively.
Elon Musk, the company’s chief executive, is still embroiled in legal disputes related to his projected acquisition of Twitter Inc., and Tesla (TSLA) will release results following weaker-than-anticipated deliveries during the quarter. In response to worries about competition and subscriber growth, Netflix (NASDAQ:NFLX) reports after introducing additional ad-supported choices and making personnel cuts.
Following significant increases in prior years, both equities have struggled this year. Netflix (NFLX) is down more than 60% this year, while the S&P 500 index SPX is down 23%. Tesla shares have plummeted more than 41% in 2022, mostly due to a drop of more than 30% in the previous month.
Since separating their streaming service from the DVD-by-mail business, Netflix (NFLX) executives have been working to reverse their most dramatic slowdown in member growth. They beat off competitor Walt Disney Co. by announcing Thursday that a new ad-supported tier will begin in November. DIS is still trying to take advantage of a restriction on password sharing and engagement plays like mobile gaming within the app. DIS is around one month late to the offering.
Despite the popularity of shows like “Stranger Things” and “Dahmer,” Benchmark Research analyst Matthew Harrigan expressed skepticism about the possibility of an imminent turnaround for Netflix (NFLX) driven by advertising in a research note on Thursday.
The macro timing is “not ideal” for new advertising business, he declared.
After announcing third-quarter deliveries of more than 343,000 — a record that was nonetheless below analysts’ projections of 371,000 — and record monthly sales of vehicles made in China in September, Tesla publishes third-quarter results on Wednesday. Although the company attributed the gap to difficulties securing vehicle transportation “at a reasonable cost during these peak logistics weeks,” it could be questioned whether Tesla is experiencing a slump in demand given the gap between those deliveries and the total number of vehicles produced, which was over 365,000.
Do Tesla’s record deliveries hide a demand issue? Full earnings preview
The Street won’t be persuaded, and residual concerns about demand challenges will stay until we hear about year-end unit projections on Tesla’s conference call, according to a research report published this month by Wedbush analyst Daniel Ives.
Positive earnings announcements from Tesla (TSLA) and Netflix (NFLX) may be able to reverse some of the early-season disappointments that have caused experts to lower their projections for the quarter’s growth. Forecasts for 2.8% growth at the end of the second quarter have already dropped to 1.6% two weeks into the third quarter, according to FactSet Senior Earnings Analyst John Butters, who also noted that fewer firms have so far exceeded expectations.
However, just 7% of the S&P 500’s firms have reported thus far; this percentage will begin to rise fast in the next week. Eight of the 30 Dow Jones Industrial Average components, including Johnson & Johnson JNJ and Goldman Sachs Group Inc. on Tuesday GS, International Business Machines Corp., and 66 S&P 500 businesses, are slated to report. Procter & Gamble Co., IBM, Travelers Group and Co. Inc. Wednesday’s TRV; Dow Inc. Thursday’s DOW, as well as American Express Co. Verizon Communications Inc. and AXP Friday morning, VZ.
Put the call on your calendar.
The parent company of Snapchat, Snap Inc., releases third-quarter financial results on Thursday. According to experts’ predictions, the business’s losses will nearly quadruple from the prior year, and its revenue growth will be minimal. That is a significant turnabout in Snap’s trajectory, as digital advertising has suffered as marketers have curbed spending because they are warier of a recession.
The perspective from Chief Executive Evan Spiegel and other executives will be crucial as the first large social media business to report, as investors search for any indications of promise for the Christmas quarter. Before Twitter TWTR, Meta Platforms Inc.’s META Facebook, and Google parent Alphabet Inc., Snap’s SNAP earnings might provide investors with insight into the troubled digital ad business. A week later, Google.
The crucial figures
At the world’s largest telecom companies, AT&T Inc., Verizon Communications Inc., and T. Following a wave of intense advertisements from the cellular carriers, the VZ findings will provide early indications of demand for Apple Inc.’s AAPL iPhone 14 (see table). For telecom businesses, there is a lot to monitor. AT&T officials observed that although customers were still paying their phone bills, they were taking a little longer than usual. After Verizon increased rates on some plans, investors will likely be looking for additional information on demand patterns at the business. Results from Verizon and AT&T are anticipated this Thursday.
Revenue from airlines: Investors will be watching for a similar performance from other carriers, such as United Airlines Holdings Inc. after Delta demonstrated a large sales recovery from pre-epidemic levels. American Airlines Group Inc., UAL Alaska Air Group Inc., and AAL Report on ALK in the upcoming week.
In-depth: This year’s holiday shopping season has a different issue than supply shortages, which may result in some savings.
In a note published on Friday, Raymond James analyst Savanthi Syth stated, “We expect revenue tailwinds experienced at Delta to also be evident at United.” Due to their extensive corporate and trans-Atlantic exposure at the former and their extensive coastal city exposure at the latter, American and JetBlue should make also profit, albeit to a lesser level.
Featured Image: Megapixl © Twindesign
Author Valerie Remorosa 
