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7 Earnings Reports To Watch Next Week

earnings reports - 7 Earnings Reports To Watch Next Week

Source: Shutterstock

Editor’s Note: This article is regularly updated to bring you the latest information.

There are a number of factors being blamed for the market’s selloff this week. Earnings reports probably weren’t the biggest factor — but they certainly didn’t help. And that means there are more earnings reports to watch this week.

A number of dearly-valued companies reported, and for the most part investor reaction was negative. Square (NYSE:SQ) is down 18% for the week. DoorDash (NYSE:DASH) fell 12% in after-hours trading Thursday following its Q4 release, despite a 5.3% selloff during the regular session.

Airbnb (NASDAQ:ABNB) traded flat after-hours following its own Q4 report, but fell more than 9% in four sessions before the release. Nvidia (NASDAQ:NVDA) earnings too were greeted with a selloff.

Certainly, these reports and others on their own didn’t drive the broader selling. In fact, it’s possible that the causation ran in the opposite direction: even strong earnings reports weren’t enough to support high valuations in a suddenly nervous market.

Whatever the cause of this week’s selloff, the market has a few more tests on the way. Those tests are among the seven most important earnings reports to watch next week:

  • Nio (NYSE:NIO)
  • Zoom Video Communications (NASDAQ:ZM)
  • Target (NYSE:TGT)
  • Sea Limited (NYSE:SE)
  • Okta (NASDAQ:OKTA)
  • Snowflake (NYSE:SNOW)
  • Broadcom (NASDAQ:AVGO)

Now, let’s dive in and take a closer look at each one.

Earnings Reports to Watch: Nio (NIO)

Nio's ET7 model shown in concept image.
Source: Nio.com

Earnings Report Date: Monday, March 1, after market close

Nio needs a big earnings report on Monday afternoon. In fact, it looks like the entire electric vehicle sector needs a big report from the Chinese automaker.

In four sessions this week, NIO declined 16%, and sold off another 6% after-hours Thursday. Tesla (NASDAQ:TSLA) is down 13% for the week and QuantumScape (NYSE:QS) 8%. And, of course, Churchill Capital IV (NYSE:CCIV) plunged after investors were disappointed by the terms of its merger with Lucid Motors.

Nio earnings probably can’t quite stem the broader weakness, as the report isn’t likely to read across to the rest of the sector. Nio’s unit sales for the quarter were disclosed when the company reported fourth-quarter deliveries back in January. Forward-looking commentary on the Chinese market likely doesn’t move shares of Western manufacturers and suppliers.

Meanwhile, the most important aspect of the report for NIO stock is specific to that company. Investors will be laser-focused on gross margin, which turned positive in the second quarter and improved nicely in Q3. Given that NIO stock still is valued at 30 times revenue, the company must show further progress in Q4. Above-expectations margin could be the kind of performance needed to stem the selling.

The question for NIO stock will be if even a strong report is enough. The question for the sector will be if a bit of good news is enough to refocus investors on the long-term opportunity in EVs.

Zoom Video Communications (ZM)

Zoom (ZM) logo on a building
Source: Michael Vi / Shutterstock.com

Earnings Report Date: Monday, March 1, after market close

Expect fireworks from Zoom earnings on Monday evening.

ZM stock is one of the most expensive in the market. The novel coronavirus pandemic obviously has driven enormous growth in recent quarters, but investors clearly are worried about the impact of a return to normalcy: ZM has pulled back some 34% from October highs. That includes the recent seven-session losing streak, Zoom’s longest ever.

Indeed, the options market is pricing in a move of over 13% next week. For that move to be positive, not only do Zoom earnings need to impress, but investors need to be willing to look past still-present valuation worries. As with Nio, the core question is whether even blowout earnings will be enough given suddenly shaky market sentiment.

Earnings Reports to Watch: Sea Limited (SE)

SEA Limited - Shopee app on mobile phone
Source: Muh.Imron / Shutterstock.com

Earnings Report Date: Tuesday, March 2, before market open

Of all the companies with earnings next week, Sea Limited might provide the purest test of just where the market stands on the “growth versus price” question.

At nearly 37 times revenue, and with earnings not expected until 2023, SE stock is as expensive as any in the entire market. But its story is as good as any in the market. Sea Limited is a gaming company, an e-commerce platform, and a fintech play rolled into one. It’s not a surprise investors have been willing to pay so dearly to own that story, particularly in a market where growth has beaten price at every turn.

That’s precisely what makes Sea Limited earnings such a fascinating barometer. If SE stock sells off on Tuesday, it seems like an enormously bearish sign for other growth stocks. Because if investors are getting worried about valuation for this company, there are few if any companies that aren’t going to face the same concerns.

Target (TGT)

Image of the Target (TGT) logo on a storefront.
Source: jejim / Shutterstock.com

Earnings Report Date: Tuesday, March 2, before market open

To be sure, it’s not all growth stocks next week. Earnings are big for the retail sector as well.

Target already has detailed its sales, but investors will be focused on fourth quarter profit margins and, more importantly, guidance for the coming year. With Walmart (NYSE:WMT) stumbling badly after its own Q4 report on Feb. 18, there’s risk that Target, too, will disappoint. But if the retailer can please investors, it could get an added boost from outperforming its biggest rival.

But if Target too struggles, there’s the chance for a broader narrative about consumer confidence to emerge next week. Target is joined on the earnings calendar by Costco Wholesale (NASDAQ:COST), Kroger (NYSE:KR), and Dollar Tree (NASDAQ:DLTR). A series of soft reports could suggest that the American consumer is pulling back even more than investors realize.

Earnings Reports to Watch: Okta (OKTA)

A magnifying glass zooms in on the Okta (OKTA) logo.
Source: Lori Butcher / Shutterstock.com

Earnings Report Date: Wednesday, March 3, after market close

OKTA stock has been another victim of the selloff in growth stocks, with a near 10% decline this week.

Okta’s earnings may well come down to a simple question: do investors buy that dip? The cybersecurity company has had 15 previous earnings reports since its 2017 IPO. It’s never missed analyst estimates for either revenue or profits. In fact, it’s never come particularly close to doing so.

That performance is a big reason why OKTA has rallied more than 1,000% in less than four years. Given the increasing demand for cybersecurity solutions amid remote work, there’s no reason to believe that the fiscal fourth quarter report will be any different. Here, too, investor sentiment toward valuation might be the deciding factor.

Snowflake (SNOW)

Snowflake (SNOW) IPO on the NYSE
Source: rblfmr / Shutterstock.com

Earnings Report Date: Wednesday, March 3, after market close

For all the hype about special purpose acquisition company (SPAC) mergers, traditional IPOs have posted exceptional returns. But if investors believe that three makes a trend, Snowflake earnings could be a huge warning sign.

Along with Airbnb and DoorDash, Snowflake had one of the biggest IPOs of 2020. And, again, investors have sold off both ABNB stock and DASH stock this week. The gains in SNOW stock have been even bigger: the stock saw a 120% first-day pop and at one point in December had more than tripled from its IPO price.

Steady selling since then, however, leaves SNOW stock only modestly above its first-day close. The performance in ABNB and DASH certainly suggests the potential for more downside next week even if earnings are strong. Essentially, Snowflake next week might come to the question of whether investors see the lower price as an opportunity, or see a price-to-revenue multiple still above 100 times as a warning sign.

Earnings Reports to Watch: Broadcom (AVGO)

broadcom (AVGO) logo outside office building
Source: Sasima / Shutterstock.com

Earnings Report Date: Thursday, March 4, after market close

For semiconductor giant Broadcom, earnings next week don’t seem nearly as fraught. The goal for AVGO stock and the sector is simple: no surprises.

Broadcom’s diversified portfolio (and outstanding management) makes it an excellent proxy for the industry. And the industry is doing exceedingly well at the moment.

Chip stocks continue to rally. A worldwide shortage of chips is boosting pricing and profit margins. Long-term trends ranging from IoT (Internet of Things) to autonomous vehicles all look exceedingly bullish.

There are some valuation concerns in the sector, as NVDA stock showed this week. At 16 times forward earnings, however, AVGO stock doesn’t share that risk. Performance simply needs to stay intact for sector sentiment to do the same. The good news for chip investors is that there are few companies in any industry more reliable than Broadcom.

On the date of publication, Vince Martin did not have (either directly or indirectly) any positions in the securities mentioned in this article.

After spending time at a retail brokerage, Vince Martin has covered the financial industry for close to a decade for InvestorPlace.com and other outlets.

Article printed from InvestorPlace Media, https://investorplace.com/earnings-reports-to-watch-next-week/.

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