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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Jan 24, 2021 at 11:59AM

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Apple aims for $100 billion in quarterly sales, and Tesla faces investors following an epic stock price rally.

Stocks rose last week, as both the Dow Jones Industrial Average (^DJI -3.57%) and the S&P 500 (^GSPC -4.04%) gained some ground during the start of fourth-quarter earnings season. Both indexes are still sitting in modestly positive territory so far in 2021.

Earnings season kicks into a higher gear this week, with many of investors' favorite companies reporting results over the next few trading days. That list includes Apple (AAPL -5.64%), Tesla (TSLA -6.80%), and Facebook (FB -5.12%), whose announcements we'll preview below.

A man and a woman holding cash fanned out in front of their faces

Image source: Getty Images.

Apple's $100 billion quarter

Investors are eagerly anticipating Apple's fiscal first-quarter report, which is set to be released Wednesday afternoon. Its last earnings announcement in late October showed off the tech leader's many business strengths, with sales hitting a record $65 billion as consumers flocked toward its products and services to help them stay engaged and productive during the pandemic. Standout performers in fiscal Q4 included Apple's Mac and laptop lines, as well as booming demand for subscription services like Apple TV+.

The iPhone will step into a more central role in this week's report thanks to the introduction of an entire new line of models this past quarter. But Apple should still get major contributions from its push into high-margin services as it works toward reaching 750 million paid subscriptions.

The company faces competition in each of these areas, but the outlook is still bright given its massive advantages in areas like innovation, customer loyalty, profitability, and marketing. Most investors following the stock are expecting to see sales jump 16% through the holiday period, up to $103 billion.

Tesla's delivery forecast

Few large-cap stocks have been as volatile as Tesla in recent months, with shares soaring over 700% in 2020 alone. That rally all but ensures that shareholders will see some fireworks following the growth stock's Q4 report on Wednesday afternoon.

In addition to the surging vehicle deliveries investors saw last year, they're hoping that the automaker can show improving cash flow trends that capitalize on its higher, more stable production rate. CEO Elon Musk and his team might also issue an aggressive outlook for the year ahead that constitutes a big step toward achieving over 1 million annual deliveries, perhaps by fiscal 2022.

Finally, many investors will be watching for updates on Tesla's product pipeline, since it will need to follow up recent wins like the Model 3 and Model X with several more mass-market vehicles to fill out its portfolio over the next few years.

What 2021 will hold for Facebook

As usual, investors are expecting to see some eye-popping engagement and profit numbers from Facebook's report on Wednesday. The social media giant's dominant business got even stronger during the pandemic, with revenue jumping 17% through the first three quarters of 2020 as net income soared to $18 billion from $11 billion a year earlier.

A woman checks her phone while shopping.

Image source: Getty Images.

This week's announcement will likely show more operating strength, although CEO Mark Zuckerberg and his team in late October predicted a slight drop in the active user base in key markets like the U.S., offset by rebounding advertising spending and sales of new consumer tech devices like Oculus Quest 2.

Facebook investors have some big questions about fiscal 2021. These include the potential for more regulatory burdens on the business, which has come under extra scrutiny due to its influence as a news distributor in a charged political climate. Look for Zuckerberg to discuss this challenge, along with other headwinds like weaker advertising demand, on Wednesday.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$140.82 (-5.64%) $-8.42
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$31,490.07 (-3.57%) $-1,164.52
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$3,923.68 (-4.04%) $-165.17
Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
$192.24 (-5.12%) $-10.38
Tesla, Inc. Stock Quote
Tesla, Inc.
$709.81 (-6.80%) $-51.80

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

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