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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Updated Feb 3, 2020 at 8:43AM

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Disney is one of several stocks that could make big moves over the next few trading days.

Virus outbreak fears helped push stocks lower even as earnings season ramped up last week. Both the Dow Jones Industrial Average (^DJI 1.27%) and the S&P 500 (^GSPC 1.73%) lost more than 2% to dip into negative territory so far in 2020.

Earnings reports are likely to dominate investor attention again over the next few trading days, so let's look at a few highly anticipated reports from Disney (DIS 3.30%), iRobot (IRBT -0.27%), and Twitter (TWTR 0.73%).

Disney's streaming stats

The sharp rally in Disney's stock price over the past few months has mostly come from surging investor enthusiasm about its pivot toward selling its content directly to consumers. On Tuesday, the entertainment giant will finally provide some hard numbers that either confirm that early optimism or reduce Wall Street's expectations. Investors will be following subscriber additions to see if the positive trend continued past the initial launch period. Just as importantly, we'll get an idea of how valuable the service is to consumers if Disney reveals metrics such as cancellation rates and streaming engagement.

A man seated in a living room points a remote control at an unseen TV.

Image source: Getty Images.

Investors will also be watching for updates on theme park attendance rates, which have trended lower in a few key resorts lately even as overall spending levels rise. Disney is hoping new attractions such as Star Wars: Galaxy's Edge might help spur that rebound. Finally, look for CEO Bob Iger and his team to discuss their film pipeline following a second straight year in which the company dominated the global box office.

iRobot's holiday performance

Many stocks were hurt by the trade war between China and the U.S., but iRobot can claim some of the most direct damage from that skirmish. As tariffs rocketed to 25% for some of imported products, the industry swung from sharp gains to modest declines just in the space of nine months. The stock price responded by falling 40% for the year, after having risen 60% through the first quarter of 2019.

On Wednesday, investors will find out whether the Roomba maker's strategic shift allowed it to arrest that operating slide during the all-important holiday season. For signs of success there, keep a watch on iRobot's unit volumes, which slipped into negative territory in the U.S. last quarter. Gross profit margin will also be key to watch, since the company slashed prices in the fall in a bid to protect market share.

The future focus will be management's reading of the health of the industry into 2020. Robust demand in 2018 gave way to a slump last year, and we'll soon find out whether that slowdown was just a temporary speed bump for the robotic cleaning device niche.

Twitter's ad platform

Investors are looking forward to Twitter's earnings release on Thursday. The social media stock has been on the sale rack since a report of weak revenue growth in the fiscal third quarter. User gains weren't the problem, as that pool rose 17%. Instead, Twitter is struggling with issues in its advertising platform and in the wider online advertising industry. Those challenges contributed to surprisingly soft operating income for the period.

We'll learn this week whether Twitter's product enhancements, both behind the scenes and related to the user experience, helped improve key trends such as engagement and user growth. But the share price movement will probably be tied to data showing how the tech stock is navigating the weakening selling environment in the online advertising world.

Demitrios Kalogeropoulos owns shares of Walt Disney. The Motley Fool owns shares of and recommends iRobot, Twitter, and Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short April 2020 $135 calls on Walt Disney. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$121.57 (3.30%) $3.88
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,761.05 (1.27%) $424.38
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,280.15 (1.73%) $72.88
iRobot Stock Quote
iRobot
IRBT
$59.71 (-0.27%) $0.16
Twitter, Inc. Stock Quote
Twitter, Inc.
TWTR
$44.26 (0.73%) $0.32

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

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