What we learnt so far from the earning season

While the coronavirus pandemic has hit markets hard, it looked that some companies had the potential to emerge from the crisis in better shape than the competition. MarketWatch calls the second quarter ‘a dramatic one for U.S. stocks’ with S&P 500 having its best quarter since 1998. In a recent article, they emphasize the fact that some stocks are still down for 2020, but there were also some “real” winners — ones that were up significantly in the first half of the year and the third quarter.

Let’s check what we learnt so far from the earning season.

Netflix disappoints for the first time

Netflix’s Q3 revenue of $6.4 billion beat the  Wall Street estimates of $6.38 billion and its own forecast of $6.33 billion. In Q3, Netflix earnings rose 18% to $1.74 a share, far below views for $2.13. Revenue grew 23% to $6.44 billion, slightly beating. Shares of Netflix slid about 5% during after-hours trading.

Netflix fell short of subscriber-growth targets for the third quarter. It posted massive growth earlier in 2020, a period when the streaming service blew away analyst estimates for subscriber growth as the pandemic fueled streaming viewership. 

Tesla is not slowing down

It looks like 2020 and the pandemic won’t slow down Tesla. Tesla’s third-quarter was impressive, posting $8.771 billion in revenue, beating Wall Street’s expectations. 

The American electric vehicle and clean energy company produced a total of 145,036 vehicles comprised of 16,992 Model S and Model X and 128,044 Model 3 and Model Y. The company also delivered 139,300 vehicles comprised of 124,100 Model 3 and Model Y, as well as 15,200 Model S and Model X.

Tesla’s strong Q3 results were likely due to the Model Y in the United States and the increasing Model 3 production at Gigafactory Shanghai. So the expectations were really high that Tesla would once more post a profit this third quarter.

Coca Cola vs Pepsi

Coca-Cola reported that its third-quarter revenue fell 9% as the coronavirus pandemic weighed on demand. The company topped earnings estimates.

Coke reported a third-quarter net income of $1.74 billion (40 cents per share), down from $2.59 billion, (60 cents per share), a year earlier.

Net sales dropped 9% to $8.65 billion, beating expectations of $8.36 billion. Organic sales fell 6%, and unit case volume, which helps measure demand without the impact of pricing or foreign currency, declined 4%.

Rival PepsiCo reported a 3% organic sales growth in its third quarter. PepsiCo reported its quarterly sales grew by more than 5% with a  fiscal third-quarter net income of $2.29 billion, ($1.65 per share), up from $2.1 billion, ($1.49 per share), a year earlier.

CmcMarkets published recently an article analyzing which of the two stocks could be the best investment option. “Pepsi might be better positioned than Coca-Cola in terms of downward trending soda interest and pandemic-related challenges. There is a lot to be optimistic about, mainly due to its diversification and sturdy sales figures. Coca-Cola’s share price has been staggering upwards after its significant drop in March when the pandemic kicked in.”- the article concludes.

Snap’s third-quarter earnings report was as good as it gets

Snap’s third-quarter earnings report was as good as it gets. Its daily active users rose 19% year-over-year, with net adds in the quarter coming in at 11 million. That’s largely consistent with what the company has done over the past few quarters.  Even after the Covid-19 restrictions were lifted throughout the summer in most of the territories, young consumers didn’t abandon Snap.

Telecom disappoints too

Q3 earnings fell both for AT&T and Verizon Communication. AT&T (T) said Q3 earnings fell 19% in line with estimates. Revenue slid 5% to $42.3 billion, topping estimates modestly. The company said it expects to generate $26 billion in free cash flow in 2020. Verizon Communications’s revenue fell 4% to $31.59 billion, slightly below views. 

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