3 things to watch on the stock market this week
Stocks fell slightly last week, Dow Jones Industrial Average (DJINDICES: ^ DJI) and the S&P 500 (SNPINDEX: ^ GSPC) throw less than 0.5%. The indices have retreated from record highs, but are still up 11% each so far in 2021.
The earnings season continues into the coming week, with many of the market’s favorite tech stocks reporting results over the next few trading days. This listing includes You’re here (NASDAQ: TSLA), I robot (NASDAQ: IRBT), and Apple (NASDAQ: AAPL), whose announcements we will preview below.
Tesla switches to new equipment
Tesla stock has been volatile over the past year, and that volatility could accelerate around its earnings report on Monday afternoon. We already know that the first quarter was a good time for auto sales, with shipments rising due to strong demand for its all-electric vehicles. Monday’s report will add important context around this growth figure, with metrics such as cash flow and operating profitability.
Wall Street is eager to hear details from CEO Elon Musk on demand trends in China, as well as updates on receiving new innovations in the Model S and Model X. And manufacturing efficiency probably increases as production increases.
But the big question is whether Tesla can meet or exceed its ambitious sales volume targets for the year. Investors are clearly expecting good news on this score ahead of Monday’s report.
Investors have high expectations ahead of iRobot’s earnings report on Tuesday. The robotic cleaning device specialist closed a strong financial year in February with sales up 28% at the start of January. That spike was supported by federal stimulus controls, which helped fuel strong home maintenance spending. iRobot achieved higher sales volumes and rising prices for the period, suggesting a healthy operating environment.
But management expects weak profits in 2021 as it relocates production out of China and ramps up manufacturing of the newer robotic vacuum cleaners. CEO Colin Angle and his team are expected to update these earnings forecasts, along with their expectations for annual sales growth, as part of Tuesday’s report. The Roomba maker will likely have positive feedback on its outlook, assuming it has avoided any major hiccups in its production or supply chain in recent months.
Apple talks about the iPhone
Apple moves up the profit base on Wednesday afternoon to report sales and profits for its fiscal second quarter. There could be some mind-boggling numbers in the ad.
Most investors expect their sales to increase 32% to $ 77 billion, in part thanks to strong demand for its latest versions of the iPhone product line. The iPhone 12 has triggered a vast upgrade cycle as smartphones shift to 5G speeds.
Apple executives have been talking about their service segment over the past few quarters, so look for more highlights in this burgeoning division. Rising demand in the App Store, Apple Music, and Apple Pay helps customers stay engaged in its ecosystem. It also supports rising and stable cash flow. Apple actually generated a record $ 39 billion in operating cash flow in the first quarter.
CFO Luca Maestri could report equally staggering numbers this week. But, as usual, tech action is likely to react most directly to the near-term sales and earnings outlook executives are releasing as part of their earnings announcement on Wednesday.
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