AAn important week in the first quarter of the revenue season has just ended, and unlike previous reporting periods, there seems to be some consensus that the market may (and will) deteriorate before things get better. After a certain increase was achieved at the beginning of the week, all three main indicators were punished in the last two days. On Thursday, the Dow Jones Industrial Average fell by 1,063.09 points, or 3.1%, which was the worst fall of the index since October 28, 2020 (in percentage).
The decline continued on Friday, the Dow index fell 98.60 points, or 0.3%, and closed at 32,899.37. Dip buyers are still nowhere to be found. The S&P 500 index fell 23.53 points, or 0.6%, to 4123.34. The S&P 500 is falling for the fifth week in a row – the longest weekly loss streak in more than a decade. After a 52-week low reached on Thursday, the technology Nasdaq Composite lost 173.03 points, or 1.4%, ending Friday’s session at 12,144.66.
Amid heightened fears of stagflation, investors continue to take a risk-taking approach, despite real April job data. After the downturn in the Dow index by 1000+ points on Thursday, which occurred immediately after strong growth on Wednesday, it is becoming increasingly difficult to gain confidence in the market, especially given the short-term headwinds that may stop growth in the coming quarters. Investors seem to be embarrassed by the volatile fluctuations. For the week, the Dow and S&P 500 fell 0.2% and the Nasdaq fell 1.5%, falling for the fifth consecutive week.
On the positive side, the U.S. Bureau of Labor Statistics reported that in April, the U.S. economy added 428,000 new jobs, exceeding economists’ estimates of 400,000 new jobs. The number of jobs has kept the unemployment rate at 3.6%, which is still above the 54-year low. Even a steady increase in the number of jobs combined with less pressure on wages have not been able to keep investors from worrying about inflation. There is no trust in the market and the Fed now.
Investors are, of course, nervous about what is expected to be an aggressive round of Federal Reserve rate hikes. At the beginning of the new week there are arguments that the shares have reached some levels of oversold. Is this optimism well established? I suspect this question will be answered by the end of this revenue season.
In terms of revenue, here are the stocks I will be watching this week.
Pelaton (PTON) – Reports after closing, Tuesday, May 10th
Wall Street expects Peloton to lose 94 cents a share on revenue of $ 969.82 million. This is compared to the quarter last year, when profits were break-even with revenue of $ 1.26 billion.
What to watch: Peloton has been under strong sales pressure over the past year, plunging around 35% and 70% over the respective thirty days and six months. Not only have stocks fallen 52% since the beginning of the year, but if you’ve held stocks since they hit their all-time high of $ 171, you’ve suffered as much as 90%. The market has lost confidence that the connected Peloton subscription platform at home can be monetized for sustainable results. The company is driven by a variety of headwinds, including supply chain constraints and balance sheet pressures. The company is reportedly looking to sell a major stake to private equity players and technology counterparts, according to in the Wall Street Journal. In the case of a desperate need for capital infusion, the share offered to minority investors can range from 15% to 20% per source. It remains to be seen whether any of this will work. But investors to develop all sorts of confidence in stocks, it’s all about performance. On Tuesday, the market will want to hear how the company is driven by these headwinds to drive revenue and profit growth in the coming quarters.
Disney (DIS) – Reports after closing, Wednesday, May 11
Wall Street expects Disney to receive $ 1.19 per share with revenue of $ 20.04 billion. That’s compared to a quarter last year when it earned 79 cents a share on revenue of $ 15.61 billion.
What to see: the magical rise of Disney is finally over? The huge benefits of the success of the broadcast have since been overcome by political controversy in Florida, as well as various headlines and constant criticism of the Disney leadership related to the so-called “Don’t Tell Gays” bill, which caused increased volatility in Disney shares. . Down 30% since the beginning of the year, stocks have fallen nearly 20% in thirty days, while giving up nearly 40% in six months. Notably, this is despite the fact that Disney has benefited from the return of major theatrical releases, as well as high demand in its theme parks. The question is, does the recent sell-off represent an opportunity to buy or should investors expect more pain in the coming quarters? The company has exceeded Wall Street growth expectations over the past few quarters. However, on Wednesday, investors will require more information on Disney’s long-term growth strategy to evaluate its true assessment.
Outside the meat (BYND) – Reports after closing, Wednesday, May 11th
Wall Street expects Beyond Meat to lose 98 cents a share on revenue of $ 111.50 million. That’s compared to a quarter last year, when the loss was 42 cents a share on revenue of $ 108.16 million.
What to see: What will it take for Beyond Meat broth to pass a taste test? A vegetable-based meat giant whose stocks have fallen by more than 40% year-on-year, including 61% and 20% over the respective six months and thirty days. Definitely, the company has lost a lot of noise, especially considering that the stock is now trading lower than on the first day of trading as an IPO. The decline in shares was due to a combination of factors. In addition to valuation problems and heightened fears of competitive threats, the company is also dealing with wage inflation and a lack of supply chains, which has affected its once-hot growth rate. The company recorded growth of just 14% in 2021, compared to 37% in 2020 and well below growth of 239% in 2019. Moreover, its gross profit also fell significantly, falling to 25.2%, up 490 basis points, while operating expenses rose more than 2,000 basis points. Now is the time to nibble on a few stocks? Thinking that the bottom is after the recent sales pressure, some analysts believe that the current stock price does not reflect the growth potential of Beyond Meat. On Wednesday, the company will need to outline what this potential looks like.
Nio Limited (COM)NIO) – Reports after closing, Thursday, May 12
Wall Street expects Nio to report a loss on the stock of 13 cents with revenue of $ 1.49 billion. That’s compared to a quarter last year when it reported a loss per share of 49 cents on revenue of $ 1.23 billion.
What to watch: Shares of Chinese electric car maker Nio have changed over the past year, losing about 60% of their value. Currently, stocks have fallen 51% since the beginning of the year, including 31% over the past thirty days, investors want to know if it’s the right time to take a position. Covid supply-related problems with Covid have put pressure on the entire industry, but the problem does not equally affect all EV stocks. In the case of NIO it is one of several electric vehicle manufacturers that have a positive free cash flow. What’s more, NIO not only annually supplies cars to customers, but also grows the company’s supply. It is estimated that sales of electric vehicles are projected to grow by 24.5% per annum by 2028. These trends can benefit the NIO. But due to the fact that the stock has fallen significantly from its 52-week high, the company on Friday can confirm its value by providing highs and lows, as well as clear recommendations for next quarter’s and full-year deliveries.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
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