This week, earning season continues in full swing with Disney, Uber, Lyft, and PayPal. While these companies stem from different sectors, they do seem to have one thing in common. They all had to grapple with last year’s economic headwinds, whether it was surging inflation and ensuing interest rates hikes, or COVID lockdowns and recession fears. So what can be expected from Disney, PayPal, and Uber’s earnings reports?
Will Disney Have a Happily-Ever-After?
Disney (DIS), the American multinational media and entertainment mogul, is expected to release its quarterly earnings on Wednesday the 8th of February after trading hours. After a turbulent 2022, whereby the company lost about 44.5% of its value, traders may want to keep an eye out on how it fared over the last quarter of the year. Some even deemed 2022 the company’s worst year since 1974.
Disney's drops could have been driven by many factors, including a revenue miss, a decline in streaming, and a hiring freeze announced last November. In addition, the company shocked many with the return of its previous CEO, Bob Iger in November. Iger, who served as Disney’s CEO and Chairman from 2005-2020, returned as Disney CEO in an attempt to restore the company’s galore and replaced former CEO Bob Chapek who was sacked. This move may have caused a sense of uncertainty among investors and traders, who may have shied away from Disney’s stock so as to see how this move would affect the company’s performance in the long run. Moreover, the COVID restrictions in China, also added to Disney’s strain, as its Shanghai theme park got temporarily shut in October in response to China’s Zero-COVID policy.
Analysts predict a YoY earnings decline and higher revenue of $23.33 billion which is almost 7% above last year’s quarter. EPS is expected to come in at $0.69 which is a YoY decline of 34.9%. Nonetheless, with the company seeming optimistic toward its reappointment of Iger, China’s Zero-COVID policy coming to an end, and some analysts positing that Disney might report subscription growth following a better-than-expected earnings report from rival Netflix (NFLX), Disney may still have the chance to restore its magic. Evidently, as of the time of the writing, so far in 2023, the company rose by 24.4% but whether or not it will sustain this growth following its earnings report is yet to be determined.
Layoffs and Macroeconomic Headwinds: How Did PayPal Fare?
Another anticipated earnings report this week is PayPal’s (PYPL) quarterly earnings on Thursday, the 9th of February after market close. The American multinational fintech group also had a tumultuous year as it slid by 63.4%. In response, PayPal announced on January 31st that it would lay off about 2,000 workers due to macroeconomic difficulties. This came in addition to other big tech companies like Alphabet (GOOG), Microsoft (MSFT), and Amazon (AMZN) laying off workers or adopting hiring freezes in order to handle the rising inflation and rate hikes. Companies like PayPal and other tech peers may have been on a downward trajectory due to the fact that in times of economic uncertainty, traders and investors alike tend to shy away from tech-heavy stocks and opt for safe-haven assets instead.
Despite last year’s gloomy outlook, as of the time of writing, the online payment company rose by 14.6% in the new year and was recently among some of the most searched stocks according to Zacks.com. So what might be driving investors’ attention towards it?
While there’s no clear reason as to why PayPal seems to be on a slight upward trend this year, the coast is still unclear for this fintech company. Many analysts seem to believe that PayPal might post underperforming results for Q4 2022 which may be exacerbated by negative consumer spending and customer demand, along with increasing competition in the mobile payment processing sector. All of the aforementioned factors may have affected PayPal’s e-commerce efforts negatively. Accordingly, analysts’ expectations for EPS come in at $1.20 which is 8.1% more than the year-ago figures and a revenue rise of 6.8% compared to last year’s numbers. How PayPal will perform is yet to be determined. Traders may want to keep an eye out for this company’s earnings in order to get a bigger picture of the online payments industry.
Will Uber & Lyft ‘Pick Up’ Their Pace?
Rivals and ride-sharing companies Uber and Lyft are expected to release their earnings this week. Results from these companies could reflect the gig sectors’ trajectory and growth. Uber (UBER) is scheduled to report its Q4 2022 earnings on Wednesday, \the 2nd of February while rival Lyft (LYFT) is expected to report its earnings the day after. As it stands, both companies seem to have been on a downward slope last year as Uber lost 43.7% while Lyft descended by a whopping 75.3%. (Source:The Wall Street Journal)
Lyft even resorted to cutting 13% of its workforce last year. In an email sent by its CEO, Logan Green, in November, the company announced that it would lay off workers in response to rising insurance costs and a “probable recession” in 2023. Uber too was not spared of challenges as it was under the radar due to the fact that gig workers’ rights were scrutinized since the pandemic. As a result, Uber and Lyft could see higher costs, which could affect their profitability and has raised concerns among investors and traders.
Nonetheless, analyst expectations for Lyft stand at an EPS of $0.10 and revenue of $1.16 billion which are above last year’s quarter’s figures. Whereas for Uber, analysts expect that company to report an EPS of $-0.21 and a revenue of $8.47 compared to $8.32 in Q3 2022.
Traders and market watchers may be eagerly anticipating this week's earnings reports with bated breath, as these reports could provide insight into how the economy is going and what growth is ahead.