What To Expect In The Light Earnings Week Ahead
During the last two weeks, the market danced to the tune of earnings of Big Tech and tech in general. Although, we're in for a breather this week with a light earnings schedule. Hopefully, the optimism that the previous two weeks brought will be maintained. Tech titans and the world's largest corporations, namely Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Apple Inc. (NASDAQ:AAPL) literally blew away estimates. Square Inc (NYSE:SQ) and Etsy Inc (NASDAQ:ETSY) followed this positive trend last week. Since March lows, the S&P 500 is now in the green for the year and the Dow Jones Industrial Average could be next.
Canopy Growth Corp (NYSE:CGC) and Marriott International Inc (NASDAQ:MAR) reported before markets opened today. Canadian-based Canopy Growth's previous fiscal fourth-quarter report from late May lacked luster. This time, its stock surged 6.8 percent after a smaller than expected loss. The net loss for the quarter that ended on June 30 narrowed to $81.05 million or 30 cents per share, whereas Fact Set expected 35 cents per share. But despite growing 22%, revenue came short. Low prices, which are a direct result of overbuilt capacity, continue to pressure the industry. Given that Canopy is the industry's most valuable producer, it seems there may not be a company better suited to deliver the potential of the sector.
As for Marriott, it missed Wall Street's expectations. This comes at no big surprise considering the continuous travel restrictions, leaving most everyone in the industry, even online travel agencies Expedia Group Inc (NASDAQ:EXPE) and Booking Holdings Inc (NASDAQ:BKNG), filled with uncertainties.
Unlike last year's profit, Marriott reported a second-quarter loss of $234 million or 72 cents per share, or 64 cents when adjusted for restructuring and non-recurring costs. Zacks Investment research forecasted a loss of 44 cents. It did surpass revenue estimates of $1.39 billion by delivering revenue of $1.46 billion. But this top-line figure couldn't make its way to the bottom line.
For someone like Marriott, the concern isn't just the short-term effect of dismal occupancy. It's the long-term reality in which there will be less business travel due to the exponential adoption of more cost-effective videoconferencing solutions provided by companies like Microsoft and Zoom Video Communications Inc (NASDAQ:ZM). Last Thursday, its rival Hilton Hotels Corporation (NYSE:HLT) reported its revenue dropped 77 percent over the second quarter and resulted in a wider-than-expected net loss of $430 million. Only one thing is certain: the travel industry will not be returning to its pre-pandemic dynamics anytime soon.
Tuesday will be rather empty but on Wednesday, we will see how Uber Technologies Inc's (NYSE:UBER) rival is doing. Unlike Uber, LYFT Inc (NASDAQ:LYFT) relies on ride-sharing which could result in a major problem for the company. Earnings report from Uber last Thursday caused its stock to rally 17 percent, which suggests Lyft may have a challenging report ahead. Uber's ride-sharing business plunged, but this loss was offset by the pandemic-driven surge in its food delivery segment. Lyft is likely to have no such luck.
The stock of Cisco Systems, Inc. (NASDAQ:CSCO) did manage to return from the dead since March, but from a longer-term perspective, its performance has not been good enough. Its adjusted net income declined year-over-year. With this report, it needs to provide investors with a glimpse of hope that growth is on the way once we return to a new version of a normal macro-environment.
On Thursday, Chinese gaming provider NetEase Inc (NASDAQ:NTES) has only one mission and that is to keep its momentum going. The stock has been in an almost uninterrupted uptrend since March. Its stock rallied over 80% since then.
On Friday, there's not going to be much to see in Draftkings Inc's (NASDAQ:DKNG) second-quarter earnings figures as far as the numbers go. Major sports events were still shuttered for almost the whole quarter. A significant revenue decline and a loss for the quarter is expected but investors will be looking at its user growth and sports-betting performance as Penn National Gaming, Inc (NASDAQ:PENN) saw a nice rally after its own Q2 report last week.
This will be a light week, but even ‘no news is good news' at this point. Even small positive developments are more than welcome, at least before the world returns to a semblance of normality.
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