With earnings season in full swing and the Big Tech firms already through the gate, there are a number of speculative investments showing their books today
Aug. 4, 2020
Normally there is some semblance of a connection between a list of stocks reporting earnings on any given day, but today’s fresh batch of corporate reveals highlight a number of diversification opportunities.
Following Virgin Galactic’s (NYSE: SPCE) less-than-satisfactory start to the week yesterday — posting losses of $54 million in Q2 — we’ve decided to give you the brief rundown of three very different companies which could be great growth opportunities or potential pitfalls as this crazy year goes on.
If rival Take-Two Interactive’s (NYSE: TTWO) record earnings report on Monday is any indication of the gaming sector, then Activision Blizzard (NASDAQ: ATVI) investors should be in for a good afternoon. The gaming industry has prospered in spite of the stock market’s extreme volatility so far this year, and as one of the leading names, Activision should be no different.
Activision’s stock is up nearly 35% year-to-date (YTD), far surpassing the S&P 500 (NYSEARCA: VOO), and has managed to keep all of its new releases on schedule despite disruptions to production. As millions were forced into lockdown during Q2, many took to gaming, so investors will be looking to see what affects a spike in users had on the company’s revenue.
For gaming companies, monthly active users (MAUs) are an important metric to measure, as this directly leads to higher net bookings — digital in-game transactions. In the last year or more, Activision has not fared fantastically, posting five straight quarters of year-on-year (YoY) declines, but the general consensus for Q2 2020 is a 26.5% increase to revenue of $1.8 billion.
It’s been a long time since I’ve written anything substantial about one of my favorite investments, Beyond Meat (NASDAQ: BYND), but I’m under no illusions that this is a very important earnings call for the fake-meat producer.
Despite having its trial deal with McDonald’s (NYSE: MCD) in Canada canceled last month, Beyond still boasts an impressive array of partners, including Dunkin’ Brands (NYSE: DNKN), Starbucks (NASDAQ: SBUX), and Yum Brands-owned (NYSE: YUM) KFC, to name a few.
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Its stock is still up more than 77% YTD, but it is prone to big moves following earnings so investors should be prepared for that. With some of its biggest clients being restaurants, which have suffered during this pandemic, the company has been forced to up its supermarket operations, now offering special BBQ packs of 10 burgers and other such deals at Walmart (NYSE: WMT) and other chains.
However, this may not be enough to stave off a loss for the quarter, with Wall Street analysts anticipating a loss per share of $0.02 on revenue of $97.75 million.
One of the best long-term investments you can buy, and a children’s favorite; Disney (NYSE: DIS) has not had the best 2020. Aside from the wild success of its ‘Netflix (NASDAQ: NFLX) killer’ Disney+, COVID-19 proved to be a perfect storm for the business. As it was forced to close all its parks and resorts, as well as halting movie production, the company has lost billions.
So, it is safe to assume that the numbers are not going to be pretty for Disney, which has seen the largest chunk of its revenue — Parks and Experiences — grind to zero. However, what investors will be looking out for is the company’s outlook for the rest of the year, and whether it has a recovery plan in place.
Analysts expect Disney to report an adjusted loss of $0.61 per share in Q2, down from a $0.60 profit in Q1, before the full impact of COVID-19 began to be felt. It also compares to $1.35 in adjusted earnings per share in the year-earlier period. Wall Street expects that Disney’s Q2 revenues dropped 39% YoY, to $12.4 billion, and that adjusted earnings before interest, taxes, depreciation, and amortization, or EBITDA, fell to a $50 million loss from a $4.6 billion profit last year.
Disney has recovered well enough from its March lows, rising 35% since then, but still remains down 21.5% for the year.
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