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Uber Technologies Inc. will report earnings two days after California voters cast ballots on a measure backed by Uber and other “gig economy” companies that seeks to exempt them from state labor law.
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The week ahead brings another packed earnings slate, but it’s likely to get overshadowed by far bigger events.
Even with companies largely trying to avoid delivering results on the afternoon of Election Day or the morning after, it’s unclear when a presidential winner will be declared given the heightened prevalence of mail-in ballots due to the pandemic and the potential for legal challenges. To add to that, the Federal Reserve meeting that kicks off Wednesday could also guide stock movements later in the week. Uncertain results could weigh on the markets as the week progresses.
A last-ditch rush to avoid getting caught up in the election cycle has made for an unusually busy earnings agenda Monday, with 27 companies set to report, and Thursday. Just 15 members of the S&P 500 SPX, -1.21% are set to report results Tuesday, with none confirmed to be after the closing bell, and FactSet lists only Hilton Worldwide Holdings Inc. HLT, +1.50% among S&P 500 components confirmed for Wednesday morning.
That means a busy docket Thursday as well, with Uber Technologies Inc. UBER, -1.90% arguably the most interesting name that afternoon. The company’s earnings will show how its ride-hailing and food-delivery businesses are faring amid the pandemic, but the report comes just two days after California voters will weigh in on Proposition 22, a ballot measure on whether gig-economy businesses have to treat workers as employees.
For more: How Uber and Lyft’s business model could be changed on Election Day
Uber, Lyft Inc. LYFT, -0.43% and fellow gig companies have been spending heavily to curry support for Prop. 22 so that they can continue to classify workers as contractors, and the result of the measure holds big implications for Uber’s business model. Chief Executive Dara Khosrowshahi has said that the company could double prices in California if the ballot measure is rejected, though some economists doubt whether that will really happen.
In all, 128 members of the S&P 500 will report in the week ahead. No Dow Jones Industrial Average DJIA, -0.59% components are on the schedule.
Earnings for the S&P are set to decline for the third straight quarter amid the pandemic, but the drop likely won’t be as bad as initially feared. FactSet now models a 9.8% blended profit decline for the index, considering already-reported results along with estimates for companies that have yet to deliver numbers. Before the start of reporting season, the model called for a 20.5% drop.
Helping matters was that Big Tech delivered big earnings beats yet again. Amazon.com Inc. AMZN, -5.44%, Facebook Inc. FB, -6.31%, and Alphabet Inc. GOOGL, +3.80% GOOG, +3.43% each posted growing earnings Thursday afternoon that exceeded expectations by at least 40%. While Apple Inc. AAPL, -5.60% saw profits decline relative to a year earlier, it still managed to top expectations Thursday. Microsoft Corp. MSFT, -1.09%, which posted numbers Tuesday, came in comfortably ahead of earnings expectations as well.
See also: Apple, Amazon, Facebook and Google all produce record sales amid Big Tech backlash
Here’s what to watch for in the week ahead.
Payday
The COVID-19 crisis has driven a wave of new users for PayPal Holdings Inc. PYPL, -4.56% and Square Inc. SQ, -8.81%, and investors will be looking to see how the companies have maintained their momentum now that the impact of stimulus payments has died down and there are fewer restrictions on activities outside the home.
The pandemic led to heightened e-commerce spending on PayPal’s platform earlier in the year, and the company has been trying to do more to engage its user base. It recently began the rollout of its Venmo credit card and launched a way for shoppers to split online payments into installments. The company will also let users buy, sell, and shop with bitcoin and other cryptocurrencies through its platform. Management may share more about that strategic vision on the Monday afternoon earnings call.
PayPal earnings: Capitalizing on surging user growth
Square has felt a different kind of impact from the pandemic, since it’s exposed to brick-and-mortar small merchants on the seller side of its business. The company’s Thursday afternoon report will spotlight the rate at which those merchants have been able to recover spending. The other half of Square is its Cash App consumer business, and Barclays analyst Ramsey El-Assal said that third-party app data point to “further growth” there with daily-active-user momentum accelerating through September.
Travel guide
Hilton and Marriott International Inc. MAR, -0.48% provide a window into the travel industry’s recovery. “While we don’t necessarily believe that hotel stocks should trade on near-term earnings (or cash burn rates), we do believe that the bias from here is most likely downward for consensus estimates for 2021 and beyond,” Evercore ISI analyst Rich Hightower wrote in a note to clients.
Hilton reports Wednesday morning while Marriott reports Friday morning.
Another read on travel come from Expedia Group Inc. EXPE, -1.12% on Wednesday afternoon and Booking Holding Inc. BKNG, -0.47% on Thursday afternoon, and there’s some caution heading into those reports.
Evercore ISI’s Lee Horowitz worries about “worsening European travel trends” when it comes to Booking, which has more international exposure. RBC Capital Markets analyst Mark Mahaney recently wrote that Expedia seems to be losing share. The Expedia brand has usually been the top destination for travel planning based on his consumer surveys dating back five years, but this year it dropped to third place behind Airbnb and Google.
Other highlights
A fresh smattering of chip-maker earnings awaits in the week to come, led by Skyworks Solutions Inc. SWKS, -2.66% on Monday afternoon as well as Qualcomm Inc. QCOM, -2.43% and Qorvo Inc. QRVO, -1.81%, both on Wednesday afternoon. “Qualcomm is well-positioned to benefit from the long-term 5G investment cycle,” Canaccord Genuity analyst T. Michael Walkley wrote recently, arguing that Apple’s launch of four 5G-enabled iPhones should help drive adoption globally.
General Motors Co. GM, -1.03% reports Thursday morning.
