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Trader or investor? Disney, Airbnb and PayPal report

Earnings in full swing, what does it mean to a trader or investor?



"earning season" usually refers to the period of time when publicly traded companies release their quarterly financial results. During this time, investors and analysts closely analyze the reports to assess a company's financial health and performance.


If earning season is in full swing, it means that many companies are currently reporting their quarterly earnings, and investors and analysts are actively reviewing the results. This is often a time of increased market activity and volatility as investors react to the earnings reports and adjust their positions accordingly.



Earnings calendar: May 8 - 12

US earnings season continues this week with results out from entertainment giant Disney, accommodation platform Airbnb, trading platform Robinhood, gaming firm Roblox, big data company Palantir, payments outfit PayPal, semiconductor play GlobalFoundries, oil producer Occidental Petroleum, and electric car start-ups Rivian and Lucid Group.


In the UK, we will have updates out from broadcaster ITV, clothing retailer ASOS, oil firm Kosmos Energy, airplane engine maker Rolls Royce, and insurers Direct Line and Beazley. Note that UK markets will be closed on Monday for the bank holiday.


Elsewhere in the calendar, we have reports from Chinese ecommerce giant JD.com, Japanese conglomerate Softbank, Japanese automaker Honda, Taiwanese manufacturer Hon Hai Precision, German mobile giant Deutsche Telekom and German biotech outfit BioNTech all pencilled-in.


Disney stock: Q2 earnings preview

Wall Street forecasts Disney will report a 13% year-on-year rise in revenue to $21.8 billion. That will be aided by an acceleration in growth from its media arm, helping absorb slower growth from its theme parks and resorts. Disney’s theme parks continue to grow profits thanks to solid attendance and higher prices while its media and entertainment arm struggles. Still, adjusted EPS is expected to drop 14.5% to $0.92 as costs continue to rise at a much faster pace than revenue. Disney+ is expected to have added 1.3 million new subscribers to end the period with 163.1 million of them on its books. ESPN+ and Hulu are also expected to grow subscriber numbers. Watch for any commentary on these two services as both could form part of any future radical shake-up under CEO Bob Iger’s strategic plan. With that in mind, a lot of attention will be paid to how far its streaming services are down the path to profitability as pressure builds on the loss-making businesses. The Direct-to-Consumer unit that homes these activities is forecast to report an operating loss of $850.3 million in the period, which would be welcome considering losses have exceeded $1 billion over the last three quarters.


Airbnb stock: Q1 earnings preview

Wall Street forecasts revenue will rise 18.7% from last year to $1.79 billion. While strong, growth has continued to slow as it keeps coming up against strong comparatives. Still, the number of nights and experiences booked is expected to jump almost 20% and hit a new all-time record high of 122.3 million, with gross bookings to jump 17% to also breach the $20 billion mark for the first time. Adjusted Ebitda – its headline measure – is expected to rise 13% from the year before to $259.6 million. Free cashflow will come under pressure and is expected to fall 15% to $1.02 billion. While growth is set to slow across the board compared to recent quarters, Wall Street is confident that things will accelerate in the second quarter as comparatives steadily become easier throughout the remainder of 2023 – although the macroeconomic environment, plagued by fears of a recession and tighter financing conditions, could threaten progress later this year. The outlook for supply growth and trends with long-term stays, which have helped provide new momentum in wake of the pandemic, will be key to shaping its view on later this year.


PayPal stock: Q1 earnings preview

PayPal has control over costs and that, twinned with resilient consumer spending in a tough environment, is expected to deliver impressive results. Net revenue is forecast to rise 7.7% from the year before in the first quarter to just under $7.0 billion, following a 8.2% expected rise in total payment volumes. Adjusted EPS is expected to jump 25% to $1.10 as cost pressures ease and expense reduction helps support bottom-line growth. The fact it is also using about 75% of its free cashflow in 2023 to repurchase shares is also supporting EPS figures. Keep an eye on the guidance for the current quarter to see if it meets expectations, with Wall Street anticipating a 7% year-on-year rise in revenue to $7.3 billion and adjusted EPS of $1.17. PayPal is currently aiming to grow annual adjusted EPS by 18% to $4.87 in 2023. PayPal has been focused on improving engagement with existing customers, placing a spotlight on the amount of revenue it earns from each user. There is also potential for news on management considering CEO Dan Schulman is retiring at the end of the year and CFO Blake Jorgensen recently left for health reasons.


Robinhood stock: Q1 earnings preview

Robinhood will start to come up against easier comparatives in 2023 following the tough conditions it experienced in 2022. As a result, net revenue is forecast to jump 41% to $422.8 million, which will also mark a material sequential improvement. That will solely down to a rise in interest income as transaction revenue is set to remain under pressure and be down 6.8%. It is anticipated it ended the quarter with 12.1 million monthly active users, an improvement from the previous quarter but down sharply from this time last year. Still, it is expected to report another adjusted loss per share of $0.51 as it struggles to cap costs, with operating expenses to be a third higher than last year, partly because of a spike in share-based compensation. That may prompt management to take more action on costs. Monthly updates show that it continued to grow deposits in January and February, with investors keen to see how flows have been impacted by the recent turmoil in the banking industry.


Roblox stock: Q1 earnings preview

Roblox continues to attract users and improve engagement, largely thanks to a growing base of older users. That remains key to the investment case, especially as investors fret over increased competition as players like Meta push ahead with metaverse plans. Roblox is expected to have had 65.7 million daily active users in the first quarter, marking a significant acceleration both sequentially and from the year before. Revenue is forecast to rise 18.7% from last year in the first quarter to $637.6 million. Bookings, representing the amount of its Robux currency bought by users, is expected to climb at a faster rate of 19.5% to $754 million. Commentary on bookings is key as this remains vulnerable to any pullback in consumer spending, although new content and innovative ad solutions should provide a positive counter. Adjusted Ebitda is forecast to decline 5.8% to $64 million as costs grow faster than the topline. Notably, it is expected to generate positive free cashflow for the first time in a year. Wall Street believes we will see a significant acceleration in revenue and cashflow in the second half of 2023, which could lead to positive upgrades to estimates.


Rivian stock: Q1 earnings preview

Rivian is aiming to double production to 50,000 vehicles in 2023. While that would mark a sizeable jump from last year, it has already disappointed markets that started the year hoping it could make as many as 60,000 cars. Sticking to this target is therefore key as improved scale is vital to improving its financial performance and limiting cash burn. We already know that Rivian produced 9,395 vehicles from its factory in Illinois in the first quarter and that it only managed to deliver 7,946 of them to customers, showing a ramp-up is needed if it is to hit its goal. Investors will also want to see that gap between production and deliveries narrow. The price war with rivals, exclusion from tax credit schemes, the uncertain economic outlook and shaky consumer confidence could all provide headwinds to demand. Rivian ended 2022 with liquidity of around $12 billion but is expected to burn through $1.5 billion in free cashflow in the first quarter and over $6 billion over 2023 as a whole. Markets believe the cash burn will peak this year but think it won’t generate cash until 2028 – which would mean much more cash will be needed before it becomes self-sustaining unless it can speed up the path to profitability. First quarter revenue is forecast to come in at $633.7 million with a net loss of $1.65 billion.


Lucid stock: Q1 earnings preview

Smaller electric vehicle start-up Lucid Group is hoping to raise annual production to 10,000 to 14,000 vehicles in 2023 from the 7,180 made in 2022. That leaves a wide range with investors hoping it can hit the top end to double output. It too needs to increase the pace and close the gap between output and sales considering it produced 2,314 cars and delivered 1,406 of them in the first quarter. Its higher price point may be discouraging buyers now that rivals are bringing down prices to stir-up demand. Wall Street is looking for revenue of $209.5 million and a net loss of $675.5 million in the first quarter. Lucid has pledged to cut costs in anyway it can this year to speed up its efforts to escape the red. It had $1.7 billion in cash and another $2.2 billion in short-term investments at the end of 2022 and it is forecast to burn through $658 million of cash in the first quarter. Analysts believe it burn through over $3.1 billion in 2023, suggesting its liquidity will come under pressure at some point considering it too isn’t expected to generate cash until 2028! The fact Saudi Arabia’s Public Investment Fund owns over 60% of Lucid provides a potential safety net should it run into financial problems.


JD.com stock: Q1 earnings preview

We will get an insight as to how consumer spending and confidence has fared in China since abandoning Covid-19 restrictions when ecommerce giant JD.com reports results. Notably, revenue growth is expected to stall to the slowest pace on record in the first quarter, with analysts forecasting a tepid 0.5% year-on-year rise to RMB240.7 billion. That will be the result of strong double-digit growth from services and logistics, countered by declines in product sales. Thankfully, analysts believe revenue will start to reaccelerate again in the current quarter as ecommerce demand rises, so investors will want to hear confirmation that it is a temporary blip and that things will improve now the economy is reopen. Adjusted earnings per ADS is forecast to come in at $3.54, up 40% from the year before thanks to an improvement in margins. JD.com has pared back loss-making activities and is focused on improving profitable operations, providing potential upside in terms of costs that are forecast to decline for a third consecutive quarter.


ASOS share price: H1 earnings preview

This will be an important update for ASOS as it is not only reporting interim results but also an update on trading in March and April, as well as the progress being made with its Driving Change agenda aimed at rectifying a number of issues, including the slow progress being made in the US, an inefficient supply chain and the need to improve its digitisation and use of data to engage customers. The new leadership team is now under pressure to deliver. ASOS has already found £300 million worth of profitability improvements to make this year and said the benefits should be better felt in the second half of the year. We know sales fell 4% in the first four months to the end of December, so investors will want to see evidence that this has improved since then. Revenue is expected to be down 3.1% in the first half as a whole at £1.94 billion but it is expected to report an adjusted pretax loss of £45.7 million. Analysts expect revenue to grow and for it to recoup those losses in the second half to eke out a profit over the full year. ASOS has said it could burn through between £0 and £100 million of cash this year. Cost-savings will be key to the narrative and could be a deciding factor as to whether investors fret over a potential cash raise in the near-term.


ITV share price: Q1 earnings preview

ITV’s trading update will focus exclusively on the topline and the outlook. External revenue is expected to be down 4.2% from the year before in the first quarter at £798.8 million. ITV Studios will continue to grow with revenue expected to rise 5.3% to £482.4 million, but will be countered by a 11% drop in advertising revenue as conditions remain tough and competition for marketing dollars intensifies. Any signs of a rebound in advertising demand would be welcomed. Its new streaming platform ITVX will be under the spotlight as it underpins its ambition to deliver annual digital revenue of £750 million by 2026. ITVX attracted 1.5 million users in its first two months and we should get an update on growth since then. ITV is aiming to deliver £15 million of cost-savings in 2023 as part of its £50 million cost-cutting target by 2026, which is on top of the £106 million of expense reduction seen between 2018 and 2022. Any acceleration or additional cost-savings would also be embraced by markets.


How to trade stocks

Earnings week FAQs

What is an earnings release date?

An earnings release date is the day on which a company is going to publicly announce its financial earnings for the preceding period – whether that’s a quarter or a year. Usually, an earnings release date can be found in an economic calendar or on the company’s investor hub.


How often are earnings released?

Earnings are released every quarter in the US, which is roughly once every three months. Other countries have different reporting obligations – which can be every six months or annually – but a lot of public companies still choose to release quarterly updates.

Should you buy or sell before earnings?

Your decision about whether to buy or sell before earnings season will depend on the stock in question and the expectations of their performance. If a company exceeds these expectations, it’s likely its share price will increase, and you’d want to take a long position. But if it disappoints, its share price could fall, and you’d want to take a short position.



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