Tesla and Netflix put their 2020 big wins on the line in the coming week

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Two of 2020’s hottest companies will look to maintain their momentum as the earnings season kicks into high gear this coming week.

Netflix Inc. NFLX,
-2,05%
has been one of the biggest beneficiaries of the COVID-19 crisis, as more people have flocked to streaming services amid quarantine measures and a shortage of new mainstream TV shows at first semester of the year. Now the question is whether this easy growth is a thing of the past.

After adding nearly 27 million new paid subscribers in the first six months of 2020, Netflix has warned investors to prepare for a downturn. Analysts expect just 3.8 million new paying subscribers for the third quarter when Netflix releases its results Tuesday afternoon. This would mark its weakest quarterly recovery in over a year.

However, Netflix isn’t all about growth in subscribers, and some analysts are bullish on other aspects of the company’s history. According to Morgan Stanley’s Benjamin Swinburne, the streaming giant seemed less affected than other media companies by production shutdowns due to a pandemic. Jefferies analyst Alex Giaimo is also encouraged by a recent price hike in Canada, which suggests a strong engagement with the Netflix platform and could also signal a future price hike in the United States.

Full Sneak Peek: Is Netflix About To Raise Prices In The United States? Recent actions suggest it could happen

The COVID-19 pandemic has not been so kind to Tesla Inc. TSLA,
-2,05%,
forcing factory closures earlier this year, but you wouldn’t know from looking at its inventory, which has climbed over 400% so far in 2020. Even though Tesla is unable to meet its previously sales target declared 500,000 vehicles on the During 2020, investors can attribute the shortfall to the pandemic and give the company a pass, according to Nelson Garrett of CFRA.

A key issue for Tesla’s earnings call on Wednesday afternoon is how the company’s demand is holding up. Tesla delivered 124,100 Model 3 and Y vehicles combined in the third quarter, although it has the capacity to manufacture at least 150,000, according to Bernstein analyst Toni Sacconaghi. This utilization rate was lower “than what we have seen in previous quarters, bringing up the question of whether demand or production was the constraint,” he wrote.

Full snapshot: Investors ask if Tesla’s sales forecast is intact

Netflix and Tesla highlight busiest earnings reporting list to date this quarter, with 84 members of the S&P 500 SPX,
+ 0,01%
and eight Dow Jones Industrial Average DJIA,
+ 0,39%
components to report this week. Here are some other major themes.

Chip shots

INTC d’Intel Corp.,
+ 0,57%
Thursday afternoon’s report follows a disappointing performance three months ago, when the company revealed a delay for its next generation of chips and said it could seek a third party to manufacture them.

In detail: how did Intel lose its crown in Silicon Valley?

Intel executives will be looking to restore confidence this time around, and Wedbush analyst Matt Bryson argued the company “should exceed expectations” after releasing a forecast he said was conservative. The company could also benefit from improved demand for PCs and automobiles, but it remains to be seen how reassuring the company can be about its long-term roadmap.

Fellow fabricant de puces Xilinx Inc. XLNX,
-0,17%
reports Wednesday. Its results will be more in the spotlight now than Advanced Micro Devices Inc. AMD,
+ 0,04%
would be interested in purchasing the business.

Find out more: an AMD-Xilinx deal would be very risky

iPhone signals

Rival Telecommunications Verizon Communications Inc. VZ,
-0,18%
et AT&T Inc. T,
-0,43%
can give early indications of the iPhone application when they report Wednesday morning and Thursday morning respectively. Pre-orders for AAPL from Apple Inc.,
-1,40%
The iPhone 12 and iPhone 12 Pro debuted on Friday.

To find out more: iPhone 5G relaunches subsidy war

The two companies could also shed light on their promotional strategies for this year’s launch. AT&T in particular has taken an aggressive approach by offering $ 800 in bill credits to new and existing customers who trade in an iPhone 8 or newer. Verizon’s most attractive deal also results in a grant of $ 800, an analyst said, but it was limited to new subscribers.

Promoting AT & T’s existing subscribers could help the company retain subscribers at a time when rival T-Mobile US Inc. TMUS,
-0,29%
improves the quality of its network, but history has shown that generous subsidies are not necessarily profitable for carriers when the whole industry offers the same types of transactions.

Travel stories

Après United Airlines Holdings Inc. UAL,
-0,26%
et Delta Air Lines Inc. DAL,
+ 0,41%
reported large losses and warned of extended recovery times due to pandemic, Southwest Airlines Co. LUV,
+ 2,26%
et American Airlines Group Inc. AAL,
+ 1,88%
will offer its own take on the situation Thursday morning. “Southwest’s main goal is to avoid time off, but that is looking increasingly unlikely,” wrote Helane Becker, analyst at Cowen & Co.

An even more dire view of the travel landscape could come from Royal Caribbean Group RCL,
-0,92%,
which has crossings pending in almost all markets. The company is optimistic about the possibility of seeing sailings resume later this year, but William Blair analyst Sharon Zackfia sees timing uncertainty and expects Royal Caribbean to record 5% capacity in the fourth quarter with occupancy levels of 50%.

Technically speaking

International Business Machine Corp. IBM,
+ 0,83%
has already reported preliminary results online for the September quarter, but Morgan Stanley’s Katy Huberty said that contrasts with “improving IT spending data points.” She expects the company to continue to lag as technology spending rebounds, and she is particularly focused on trends in the company’s cloud and cognitive software business when IBM reports back. Monday afternoon.

IBM profits: CEO’s first big move will be scrutinized more than the numbers

Snap Inc. SNAP,
-0,82%
follows with his report on Tuesday and his report will serve as the first signal on social media advertising trends. Stifel analyst John Egbert expects the company’s revenue growth to “accelerate significantly” from second-quarter levels as advertising demand has recently declined. “Despite a slim list of feature films in recent months, data / anecdotes from major agencies and advertisers regarding directional trends in the advertising market have been largely positive since August,” he writes.

Here is the Dow

Monday’s IBM report kicks off a busy week of earnings reporting on Dow Jones Industrial Average stocks. Procter & Gamble Co. PG,
+ 0,38%
and Travelers Cos. Inc. TRV,
+ 0,60%
both report Tuesday, followed by Verizon on Wednesday morning. Coca-Cola Co. KO,
+ 0,08%
et Dow Inc. DOW,
+ 0,59%
are scheduled for Thursday morning, with Intel this afternoon. American Express Co. AXP,
+ 0,46%
full week Friday morning.

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