This earnings season is powering ahead at full speed with a host of important reports expected to be released this week. Key firms from various sectors will reveal to the public how they fared over the most recent fiscal quarter in the upcoming days.
Bank of America Rakes in the Interest
Venerable financial institution Bank of America (BAC) is set to release its Q2 2023 earnings report Tuesday, July 18th, before the beginning of the trading day. Investors may be especially interested to see how this firm did over the course of the last quarter following last week's earnings reports from Wells Fargo (WFC) and JPMorgan (JPM).
Among its industry peers, Bank of America’s portfolio is especially attuned to changes in the interest rate. Accordingly, the steep rate hikes instituted by the Federal Open Market Committee (FOMC) are expected to have had a significant impact on this bank’s bottom line in the second quarter. Net interest income for Bank of America is expected to have grown by 14% in Q2 2023 to reach around $14.3 billion.
While high-interest rates may have provided an income boost, continuing high inflation and lower lending activity could have proven challenging for the firm. Analysts widely expect that average interest earning assets declined over the course of the quarter.
However, Bank of America’s earnings per share (EPS) figure is predicted to come at 83 cents, a 15% year over year jump, on sales of over $25 billion, which would be 10% higher than Q2 2022’s corresponding figure. Whether this will be enough to arrest the 12% slide in share price that Bank of America has seen so far this year is as yet unknown.
Goldman Sachs Faces Headwinds
Industry peer Goldman Sachs (GS) is also expected to release Q2 2023 numbers this week. Before market open on Wednesday, July 19th, traders will be able to get a sense of how this key American financial institution fared over the course of the quarter.
As with other banks, high interest rates are expected to have had a positive impact on net interest income for Goldman Sachs. Analyst predictions are for this figure to show a year over year rise of 11% to reach over $1.9 billion.
While income from interest payments may have increased, it’s also expected that costs will have risen for Goldman Sachs as well. In Q2, the bank made investments in technology, and furthermore, had to pay litigation costs due to a multimillion Euro fine imposed on its European division by the European Central Bank.
Accordingly, predictions are for earnings per share to have fallen by over 40% year over year to $4.53 on revenues of just under $12 billion, which would also represent a nearly 1% fall from the year ago figure. Goldman Sachs shares have lost nearly 5% of their value so far in 2023, but it remains to be seen how markets will react to Wednesday’s report.
Tesla Powers Ahead
Electric vehicle industry leader Tesla (TSLA) is expected to release Q2 2023 results to the public on Wednesday, July 19th, after market close. Every earnings release over the past year from this firm has beaten predictions, so expectations may be riding high ahead of this week’s report.
Delivery figures for Tesla vehicles shot up in the second quarter of this year, reaching over 460,000 cars. This jump represented a more than 80% increase from the year ago figure, and 10% more than Q1’s deliveries number. According to experts, this steep rise could be due to the discounts Tesla has used to incentivise purchases from customers in the United States and China.
Estimates are for quarterly revenues to come in at nearly $24.9 billion, representing a year over year increase of just under 47%. This would bring earnings per share to 83 cents, but whether this will push Tesla’s share price beyond the 128% gain it’s already shown in 2023 cannot yet be ascertained.
Streaming pioneer Netflix (NFLX) is expected to release Q2 2023 results on Wednesday, July 19th, after the trading day ends. Analyst predictions are for the company’s earnings per share to come in at $2.84 on a revenue increase of 4% to $8.3 billion.
While Netflix has ceased providing subscriber addition figures over the past two quarters, in May, the firm changed its policies on account sharing, which could have led to a boost in monetization. Now, American customers have to pay a $7.99 surcharge in order to share an account with those outside of their household. According to external estimates, toward the end of May, the streaming service added a large amount of subscribers due to this change in policy. (Source:Forbes)
Furthermore, Netflix has indicated a move toward relying more on advertisements as a source of revenue. The benefit to the firm’s bottom line from ad-supported streaming plans could already be exceeding that from more expensive ad-free subscriptions. How this change in business model, as reflected in Wednesday’s report, could affect Netflix’s nearly 50% share price increase so far in 2023 remains to be seen.
As the second earnings season of the year moves forward, investors are getting more of a sense of how different economic sectors have responded to varying macro conditions. How markets react will be revealed in the coming days.