Stocks were essentially flat last week. Both the Dow Jones Industrial Average (^DJI 0.38%) and the S&P 500 (^GSPC 0.71%) shed less than 0.3% as first-quarter earnings reports started flooding in. Indexes are lower by over 12% so far in 2020 but have recovered significant lost ground in recent weeks.
Several companies will announce highly anticipated earnings reports over the next few trading days, including Walt Disney (DIS 2.56%), Beyond Meat (BYND -2.21%), and Activision Blizzard (ATVI 0.31%). Below we'll take a look at the key trends that might send their stocks moving this week.
Disney's streaming numbers
Investors have become far less optimistic about Disney's business in recent weeks. Major parts of the entertainment giant's empire remain closed, after all, including most theme parks, hotels, and cruise ships. ESPN has had to navigate through a prolonged period without sporting events to broadcast. Disney's consumer product sales must be slumping along with customer traffic at most retailing locations.
But the company could also report some good news in its fiscal second-quarter results on Tuesday afternoon. That starts with Disney Plus, which raced past 50 million subscribers to succeed at building a real challenge to industry-leading Netflix where others like Blockbuster and Walmart failed. Just like Netflix did in late April, Disney is likely to post surging demand for its streaming properties.
New CEO Bob Chapek will need to reassure investors that Disney has the cash needed to navigate through the rest of the COVID-19 threat. While management can't predict an actual date for reopening its parks, look for executives to discuss cost cuts and the strength of their balance sheet this week.
Beyond Meat's market share
Beyond Meat stock is riding high heading into Tuesday's earnings report. The specialist in plant-based meat alternatives has given investors a few reasons for optimism about its growth trajectory, including a new partnership with Starbucks' China locations. The pandemic might spur more demand at home, too, especially as meat processing giants like Tyson Foods struggle with out-of-stock challenges.
Overall, most analysts who follow the stock are expecting sales to more than double to $86 million in the fiscal first quarter. That's tiny compared to the $10.8 billion of revenue that Tyson reported in its last quarterly outing. And Beyond Meat is also expected to post another net loss this quarter.
Yet investors have been more focused on its triple-digit growth rate, which could continue if it wins significant market share from traditional meat producers.
Activision Blizzard's user base
Video games are one of the few entertainment options left to most consumers who are practicing social distancing these days. That situation could set the stage for some head-turning results from Activision Blizzard on Tuesday. The publisher had solid momentum before the COVID-19 pandemic, with its Call of Duty franchise retaking first place on sales charts in February while entering the popular free-to-play battle royale niche. In early February, management predicted the company would return to sales growth in 2020 and demonstrated that confidence by raising the dividend 11%.
The gaming landscape has only improved since then, and so Activision is expected to meaningfully exceed the forecast that CEO Bobby Kotick and his team issued, calling for $1.64 billion of sales this quarter. The key metrics to watch will be audience size and engagement. Look for an important update on monetization, too. That figure should be lifted by Activision's bigger base of users this quarter, but might also be pressured by the slump in digital advertising.