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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos – Aug 4, 2019 at 9:18AM

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Look for big moves from Shake Shack, Match Group, and Activision Blizzard over the next few trading days.

Stocks fell sharply last week, as global trade tensions offset news that the Federal Reserve is lowering interest rates for the first time in a decade. Both the S&P 500 (^GSPC -0.43%) and the Dow Jones Industrial Average (^DJI -0.57%) shed nearly 3%, but they remain in solidly positive territory for the year.

Second-quarter earnings season rolls on in the week ahead, with hundreds of companies set to announce results and issue updates to their outlooks. Let's take a closer look at three of the most anticipated reports to come, from Shake Shack (SHAK 3.77%)Match Group (MTCH) and Activision Blizzard (ATVI).

Shake Shack's customer traffic

Investors are optimistic heading into Shake Shack's earnings report on Monday. The reason for that confidence is partly that restaurant industry peers, including McDonald's, Starbucks, and Chipotle Mexican Grill, all recently posted some of their best growth numbers in years. But the "better burger" chain has contributed to the bullish mood by revealing a return to customer traffic growth over the past two quarters .

A man takes a bite of a burger.

Image source: Getty Images.

We'll find out on Monday whether that positive growth momentum carried on deeper into 2019, with comparable-store sales perhaps accelerating past the previous quarter's 4% jump. Yet the bigger growth driver for Shake Shack is its potential for a much larger store base. That means investors will be closely watching metrics like operating margin, sales, and net store launches for signs that suggest the chain can keep expanding after opening a projected record 38 new restaurants in fiscal 2019.

Match Group's revenue per user

Online dating specialist Match Group will announce its results on Wednesday morning, and there's every reason to expect good news from the owner of the Tinder, Match, and PlentyOfFish apps. Its last earnings report showed a head-turning 36% jump in the Tinder user base, for example, which helped power a 16% increase in users across Match's portfolio at the start of 2019. The company now counts nearly 9 million subscribers.

Investors will be looking for similar gains this quarter, as Wall Street is predicting 16% higher sales in Q2. Some of Match's biggest growth is coming from its international business, which is on pace to surpass its U.S. segment this year. In addition to that rising engagement level, keep an eye on the company's average revenue per user metric, or ARPU. That figure barely budged last quarter but will need to increase as Match finds ways to monetize all of the user activity on its growing global service.

Activison's 2019 outlook

Investors haven't found much to celebrate in Activision Blizzard's last few earnings reports, since they showed an uncharacteristic decline in key growth metrics, including audience size, engagement, and monetization. The video game developer has been struggling through several challenges, including the loss of its Destiny franchise and a shrinking user base across other brands such as Call of Duty.

CEO Bobby Kotick and his team have been laying the groundwork for a rebound over the past few quarters, mainly by reorganizing the business to focus more resources on its biggest brands. "Gamers are playing fewer gamers longer," Kotick told investors back in May, and that shift makes it even more important to delivery compelling experiences in tentpole franchises like Diablo, World of Warcraft, and Call of Duty. Activision is planning a surge of fresh content in these franchises over the year's second half, and on Thursday we'll find out whether executives think that boost will set the company up for a return to growth in 2020 following a tough transition year this year.   

Demitrios Kalogeropoulos owns shares of Activision Blizzard, Chipotle Mexican Grill, McDonald's, and Starbucks. The Motley Fool owns shares of and recommends Activision Blizzard, Chipotle Mexican Grill, Match Group, and Starbucks. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Match Group Stock Quote
Match Group
MTCH
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$30,101.54 (-0.57%) $-172.33
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,766.88 (-0.43%) $-16.40
Activision Blizzard, Inc. Stock Quote
Activision Blizzard, Inc.
ATVI
$74.11 (%)
Shake Shack Stock Quote
Shake Shack
SHAK
$48.21 (3.77%) $1.75

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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