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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Jan 31, 2021 at 2:00PM

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Activision Blizzard is one of several widely followed stocks set to report holiday quarter earnings results over the next few trading days.

Stocks lost significant ground last week, as both the Dow Jones Industrial Average (^DJI 0.22%) and the S&P 500 (^GSPC 0.02%) shed over 3%. The declines put both indexes into negative territory so far in 2021.

Hundreds of companies will announce holiday season quarterly results over the next week, including Amazon (AMZN -1.13%), Activision Blizzard (ATVI), and Hershey (HSY 0.58%). Let's look at what investors can expect to hear from these companies.

Two kids playing video games.

Image source: Getty Images.

Amazon aims for $120 billion

Amazon announces its holiday season results on Tuesday, and investors are eager to hear how the e-commerce giant fared during its peak shopping period. All signs are pointing to a potentially blockbuster performance.

Amazon has enjoyed soaring sales through most of the pandemic thanks to the combination of a stampede toward e-commerce and more demand for its cloud services platforms. The tech giant added $67 billion to its annual sales base over the first three quarters of the year, translating into a 26% gain.

In October, CEO Jeff Bezos and his team predicted more of the same in the fourth quarter, but they issued a wide sales outlook. Revenue should rise by between 28% and 38%, executives said, to as much as $121 billion. Wall Street's projection is tilting toward the higher end of that range, but investors' attention will also be Amazon's forecast for the new fiscal year, which will likely pair slower growth with higher short-term expenses.

Activision's Call of Duty

Activision has been a huge beneficiary of the shift toward at-home entertainment, and that trend is likely to lift its results again on Thursday. The video game giant's last report was impressive, with sales hitting $1.95 billion compared to management's $1.8 billion forecast thanks to surprisingly strong demand for content in the Call of Duty, World of Warcraft, and Candy Crush franchises.

The wider portfolio should do well again in Q4 so that both sales and profitability continue climbing. But Activision should have especially good news to report about the latest Call of Duty title, which was released at a time when a record number of gamers were engaged with the brand. Another dominant performance by that core brand should set Activision up for a great 2021 as it morphs from video game developer into more of a digital entertainment platform with revenue streams that include advertising, licensing, and consumer products.

Hershey's candy volume

Hershey was left out of the stock market rally in 2020, but the candy giant has a chance to change that sour investing narrative starting with its Thursday earnings report. It already showed hints of a solid growth rebound in place as organic sales returned to solidly positive territory in the fiscal third quarter. Cost cuts, price increases, and a shift toward salty snack sales helped deliver even better earnings growth, too.

CEO Michele Buck and her team forecast another strong sales quarter ahead for Q4, even though profits might be temporarily constrained by higher spending in areas like marketing. But the bigger factor supporting a sustained rally for the stock would be higher sales volumes.

Hershey is aiming to get more growth from that metric in 2021 rather than relying mostly on higher prices. If it succeeds, this dividend stock could deliver income along with extra capital gains for shareholders this year.

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Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$2,235.49 (-1.13%) $-25.61
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$32,268.12 (0.22%) $71.25
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,024.70 (0.02%) $0.81
The Hershey Company Stock Quote
The Hershey Company
HSY
$227.22 (0.58%) $1.31
Activision Blizzard, Inc. Stock Quote
Activision Blizzard, Inc.
ATVI
$77.75 (0.01%) $0.01
Activision, Inc. Stock Quote
Activision, Inc.
ATVI

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

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