Market Overview

Are Malls Dead? AMZN, EBAY Earnings May Tell All


Talk of the death of the shopping mall has its roots in the growth of e-commerce. How pervasive is shopping online? Results from two technology retailers, Amazon (NASDAQ: AMZN) and eBay (NASDAQ: EBAY), could open the doors to the lure of sitting in front of a computer and shopping till you drop. Also on tap are reports from AT&T (NYSE: T) and Chipotle (NYSE: CMG).

Will AMZN Make the Mark?

One of the world’s largest sellers of almost everything online reports results after market close Thursday. Will expenses for the Prime membership program and Amazon Web Services, its cloud service, eat away at AMZN’s bottom line?

Learn more here.

Analysts reporting to Thomson Reuters are looking for revenues of $27.99 billion that will generate a per-share profit of $0.58. That’s substantially better than the year-ago period when AMZN lost $0.12 a share. But analysts say they are worried because AMZN’s earnings performance has been spotty in recent quarters, missing Wall Street’s expectations in four of the last eight quarters. The biggest miscue? The last quarter when it missed projections of $1.56 a share by $0.56.

Short-term options traders have priced in a potential 7% share price move in either direction around the earnings release, according to the Market Maker Move indicator on the thinkorswim® platform by TD Ameritrade.

Going into earnings, there’s a smattering of buyers at the 625-strike calls with defensive positions being taken by buyers of the 600-strike puts. The implied volatility is also relatively high for this earnings season at the 67th percentile. (Please remember past performance is no guarantee of future results.)


How Is eBay Driving Revenue?

With EBAY still in revenue-recovery mode since the July 2015 split of PayPal, analysts say they’re looking for numbers on active buyers, international sales, data capture, and social-media drivers among others. Will EBAY be able to deliver?

At Thomson Reuters, analysts are forecasting top-line sales of $2.1 billion, about flat with the year-ago quarter minus PayPal’s contribution. Earnings per share are expected to reach $0.45.

Short-term options traders have priced in a potential 7.5% share price move in either direction around the earnings release, according to the Market Maker Move indicator.

Going into earnings, there’s activity in the at-the-money calls at the 24-strike with the 24- and 25-strike call spread on the weeklys. The primary put interest is with some buyers at the 23.5-strike. The implied volatility is much higher than some other stocks for this earnings season at the 74th percentile.


What Happened to T’s U-Verse?

When was the last time you saw a U-Verse commercial? Can’t remember? It’s because AT&T (T), which is reporting earnings late today, has been directing customers to the DirecTV satellite service it bought last year. Is that working? What about the over-the-top video service it’s been promising to roll out before the year is out? Is that still on track?

Analysts have high hopes for T’s earnings, which they project to rise to $0.69 a share from $0.63 a year ago on revenues of $40.53 billion compared with $32.58 billion last year. Remember, though, those sales didn’t include DirecTV sales.

Short-term options traders have priced in a potential 2.5% share price move in either direction around the earnings release, according to the Market Maker Move indicator.

Going into earnings, options are trading in a tight range with buyers at the 38.5- and 39-strike calls and at the 38-strike puts. The implied volatility is in the 23rd percentile.


Did Burrito Freebies Lure Customers to CMG?

Slammed by a bout of E. coli and other health-related issues last year that kept customers away, Chipotle’s (CMG) earnings won’t be pretty, analysts warn. But did the burrito freebies and gratis chips with salsa or guacamole gimmicks work at luring customers back in?

We’ll get some insight when CMG releases results after the bell today. CMG executives have already alerted Wall Street that it’s on track to turn in its first quarterly loss as a public company amid a double-digit drop in February and March sales at restaurants open longer than a year, a key industry measure of growth. At Thomson Reuters, analysts are expecting a loss of $0.94 share, a white-knuckled 76% dive from the year-ago period. Revenues are projected to tumble 20% to $869 million.

Short-term options traders have priced in a potential 7% share price move in either direction around the earnings release, according to the Market Maker Move indicator.

Even with the beating the stock has taken in the aftermath of the health issues, it’s still a high-priced stock, which makes it tough to get a good read on options. There’s nothing of open interest showing up over the 500-strike calls and some buyers of the 420-strike puts. The implied volatility sits at the 62nd percentile.


Probability analysis results from the Market Maker Move indicator are theoretical in nature, not guaranteed, and do not reflect any degree of certainty of an event occurring.

TD Ameritrade and all third parties mentioned are separate and unaffiliated companies, and are not responsible for each other’s policies or services.

Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold.

Market volatility, volume, and system availability may delay account access and trade executions.

Past performance of a security or strategy does not guarantee future results or success.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.

The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2016 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.

Posted-In: Previews Trading Ideas


Related Articles (AMZN + CMG)

View Comments and Join the Discussion!