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Earnings Season Continues with PayPal, Disney & Rivian

Plus500 | Monday 08 May 2023

Earnings season continues this week with financial reports from different companies like PayPal, Disney, and Rivian. As the world still grapples with economic uncertainty ranging from record-high inflation to ensuing recession fears and further Fed rate hikes, traders and analysts alike may want to see how these companies perform and what they can reveal about the state of the uncertain economy. Here’s what you need to know about this week’s upcoming quarterly earnings reports:

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PayPal: How Did One of the World’s Largest Online Payment Companies Perform?

American multinational fintech and payments company, PayPal (PYPL) is expected to report its Q1 2023 earnings today, Monday, May 8th after the ring of the bell. While it is yet unclear how PayPal really performed in the first quarter, it is believed that the cost-cutting measures the company took, may be fruitful. 

In order to face inflation and high interest rates PayPal announced that it would lay off about 7% of its workforce, resulting in 2000 employees losing their jobs. In addition, the company’s CFO, Blake Jorgensen, also resigned in March and its CEO, Dan Schulman, is reportedly leaving the company by the end of 2023.

While these changes brought with them a drop of almost 20% in PayPal value in 2022, analysts expect them to have boosted the company’s net income by 50% in Q1 2023. In addition, estimates suggest that PayPal would post an adjusted EPS of 68 cents in Q1 which is higher than last year’s quarter EPS of 43 cents. The company’s revenue is expected to have grown as well by 8% to reach $7 billion.

To top it off, analysts predict PayPal’s Total Payment Volume (TPV) to rise by 7% to $345 billion. According to PayPal, the TPV is a measure of the company’s payments and net of reversals completed on its or its partner’s platforms. Accordingly, if these estimates materialize, the company’s TPV would be its second-highest quarterly one. 

As of the time of the writing, despite last year’s woes, PayPal was able to remain relatively stable amidst the overarching market volatility and even rose slightly by 0.53% through 2023. Nonetheless, whether or not it would be able to sustain this stability in the months to come is yet to be determined and can be affected by today’s report.

Is Rivian Running on Low Batteries?

American EV-maker, Rivian (RIVN), is scheduled to release its Q1 2023 earnings on Tuesday, May 9th, after market close. The EV giant, which wiped 10.7% of its value in Q1 2023 and by 22.5% up till now, is actually expected to report an earnings beat. 

According to analysts, Rivian is expected to post astounding revenue growth of 623% from the year-ago numbers to land at $686.82 million. On the flip side, the company’s EPS is expected to be $1.51 which is a YoY decline of 5.6%. 

It might also be worth noting that Rivian too was among the companies that hopped onto the layoffs bandwagon numerous times, as it cut about 6% at the beginning of the year in an attempt of facing rising competition from other EV-makers like Tesla (TSLA), Ford (F) and other economic headwinds. Analysts note that these cost-cutting measures may have helped the company recoup some of its losses. (Source:Yahoo Finance)

Nevertheless, Rivian's trajectory remains murky as it has stopped reporting its reservation data. This is why Tuesday’s financial report is expected to reveal a lot about the state of the automobile industry, in general, and the EV sector in particular. Since the beginning of the year up till now, the company lost about 21%.

Will Disney Have Its Happily Ever After?

Entertainment and streaming giant, Walt Disney (DIS) is scheduled to report its Q2 2023 earnings on Wednesday, May 10th, after market close. Only a few days following other entertainment companies like Paramount Global (PARA) reported disappointing earnings on Thursday, it would be interesting to see how Disney performs, especially in light of the market competition from other companies like Netflix (NFLX) which reported mixed Q1 results in April. 

Despite having had a rollercoaster year as it dealt with layoffs, a broadcasting failure from Disney+ in India, and the uncertainty from former CEO Bob Chapek being replaced by Bob Iger back in November 2022, the company’s stock price rose by 12.9% since the beginning of the year up till now.

As for its Q2 2023 earnings, Disney is expected to report higher quarterly revenue of $21.8 billion and a lower EPS of $0.99 which is a drop from the year ago’s $1.08 quarterly EPS. Nonetheless, the overall earnings estimates suggest that compared to last year’s quarter, the company is likely to experience an earnings loss. Whether or not these predictions are true, will be revealed on Wednesday. 

In conclusion, this week will be an especially interesting one for traders and analysts alike as these companies can provide valuable insights into the state of the economy and the markets. 


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