ROKU - This Week's Earnings Stars
On Friday, all three major averages were punished. Most notably, the Dow plunged more than 400 points with the absence of another round of fiscal stimulus. Friday’s selloff placed stocks at their worst week since March. An encouraging rise in demand for products and services was offset by weak guidance from Big Tech, namely Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOG, NASDAQ: GOOGL) and Facebook (NASDAQ: FB) which pulled all of tech down. But, this week could bring a piece of good news as it will answer some very important questions.
Can PayPal dominate the payment field?
Wall Street expects PayPal (NASDAQ: PYPL) to earn 94 cents per share on revenue of $5.43 billion, as opposed to the same quarter last year when earnings were 61 cents per share on revenue of $4.38 billion. The main question that PayPal will be asked to answer is whether it is poised for dominance in the new digital payments era. In October, PayPal entered the Bitcoin field as it introduced its “Crypto Currencies Hub” to U.S., besides Hawaii, as part of its strategy to expand into other payment options. Its CEO Dan Schulman defined a goal of 1 billion users transacting on PayPal on a daily basis.
Can Qualcomm continue its winning streak?
The chipmaker has recorded a strong streak as it exceeded estimates by 15.42%, on average during its latest two reports. Wall Street expects this to still be the case with a YoY increase in earnings due to higher revenues. Qualcom (NASDAQ: QCOM) will reports results for the quarter ended in September 2020 on November 4.
Can Alibaba insulate itself from political tensions and competitors?
The Chinese e-commerce giant is set to report its second-quarter earnings on November 5 th . In its last reported quarter, Alibaba (NASDAQ: BABA) delivered an earnings surprise of 6.6% but its overall surprise history is even more impressive. It surpassed estimates in all the trailing four quarters, with an average surprise of 22.1% as it has been continuously devoted to add value both to its consumers and sellers. It enhanced its consumer segment, product enrichment, as well as platform innovations. This strategy is expected to have expanded the customer base and strengthened top-line growth, along with cloud computing. However, political tensions might have weighed on the company’s international growth.
Moreover, increasing competition from companies such as Amazon.com Inc. (NASDAQ: AMZN) and JD.com Inc (NASDAQ: JD) as well as deceleration of growth in the e-commerce market, both domestically and internationally, might have impacted its earnings in the soon-to-be-reported quarter.
Can Roku alleviate valuation concerns?
Despite consistently outperforming expectations, concerns remain about Roku’s (NASDAQ: ROKU) valuation despite the streaming player’s unique business model. Roku’s ad-driven streaming business is poised to sustain its growth as Apple’s (NASDAQ: AAPL) Apple TV+ and Disney’s (NYSE: DIS) Disney+, among others, have been added to its platform. On Thursday, Roku is expected to alleviate these concerns by demonstrating ad pricing power, and a sustainable strategy towards achieving profitability.
Can Peloton sprint by estimates?
Investors are wondering whether Peloton (NASDAQ: PTON) will manage to sprint by expectations yet again on November 5. Last quarter, it crushed Wall Street’s estimates for both the top and bottom lines, as the COVID-19 pandemic continued to provide a powerful catalyst for growth. While the market assumes Peloton is well-positioned to disrupt the fitness industry through its at-home connected fitness subscription platform, valuation concerns have emerged. Last week, its stock has dropped 10% last week and managed to offset most of its gains from its record Q2 results. But in 2020, its shares have gained 331% until October 23, whereas the market has returned only 8.9% over the same period. The maker of connected home-exercise equipment is heading into its 2021 fiscal first quarter on a good note.
The trifecta: presidential election, pandemic and fiscal stimulus
Aside from the COVID impact where there’s a surge in cases both in the US and the EU, with France and Germany already in their second lockdown this year, investors are worried about two more things: the outcome of the presidential election and the additional fiscal stimulus. And unfortunately, this week there is no hope that either of those three topics will have a positive outcome.
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