Stocks were mixed last week, with the Dow Jones Industrial Average (^DJI 0.40%) losing 0.5% while the S&P 500 (^GSPC 1.02%) gained just over 1%. Investors processed a flood of second-quarter earnings reports, balanced against news of deepening economic disruption from the COVID-19 pandemic.
Earnings season continues in the coming week, and below we'll look at a few highly anticipated reports that might send Wayfair (W 2.08%), The New York Times (NYT -0.18%), and Roku (ROKU -10.29%) stocks moving over the next few trading days.
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Wayfair's repeat business
Investors have a few reasons to look forward to Wayfair's second-quarter earnings report on Wednesday. The home furnishings seller likely benefited from close to ideal selling conditions as many of its physical competitors had to close their stores during social distancing efforts in April, May, and June. Extra stay-at-home time, meanwhile, plus income from stimulus payments, lifted demand for home upgrades.
These trends have Wall Street predicting that Wayfair's sales soared nearly 70% in the second quarter to $3.9 billion. In addition to that top-line figure, keep an eye on the e-commerce specialist's key engagement metrics. Repeat orders are especially helpful to track because they imply robust customer satisfaction and enduring market share.
Wayfair might have even better news on the profit front, thanks to the combination of surging sales volumes and plunging expenses. In February, management predicted that they'll reach adjusted profitability for the first time in 2020, and this quarter will likely mark the start of that upgraded earnings profile.
Roku's advertising strength
Investors have been conflicted about Roku stock in 2020, but its Wednesday announcement might help clear up some of that debate.
On the positive side, look for user gains to soar. The streaming video platform notched a 37% increase in its user base last quarter while showing far higher engagement. If the latest report from Netflix is any indication, then Roku's core growth figures likely accelerated during COVID-19 lockdown days in April, May, and early June.
Investors may be bracing for the company to give a cautious outlook for the rest of the year, as Netflix did in early July. But the bigger questions are around advertising and how well that revenue source held up in recent weeks.
Most investors who follow the stock are expecting to see another quarter of net losses, with sales growth hampered by disruption in the digital ad business. But management is still likely to sound a bullish tone on Roku's long-term potential as cord cutting continues boosting the streaming niche.
The New York Times' subscriber growth
Investors have some big questions heading into the Wednesday morning earnings report from The New York Times. The stock has outperformed many media peers in 2020 thanks to some encouraging growth and engagement metrics. User gains are accelerating across several of its digital content offerings, including the core news service. That success allowed the company to keep revenue rising last quarter even as advertising sales shrunk by 15%.
CEO Mark Thompson and his team said back in early May that the advertising slump would likely accelerate in Q2, and that's why investors are bracing for a double-digit revenue decline this week.
But the more important metrics to watch will be subscriber gains, which are helping The New York Times become less dependent on the volatile ad business, and cash flow as the business aims to improve its financial strength.
