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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos – Oct 17, 2021 at 7:00AM

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Tesla is one of hundreds of companies set to announce earnings results over the next few trading days.

Stocks rose last week, as both the Dow Jones Industrial Average (^DJI -0.10%) and the S&P 500 (^GSPC -0.61%) gained nearly 2%. Both indexes are just slightly below their all-time highs. 

Earnings season ramps up with a flood of fresh earnings reports over the next few trading days. Let's take a closer look at a few highly anticipated announcements from this list, by Netflix (NFLX -1.21%), Procter & Gamble (PG -0.85%), and Tesla (TSLA 2.52%).

Person watching TV on a laptop.

Image source: Getty Images.

Netflix's holiday outlook

There will be plenty for investors to follow in Netflix's Tuesday earnings announcement, highlighted by a fresh look at subscriber trends. That core growth metric has been noisy in recent quarters, with gains slowing in 2021 after soaring during the pandemic.

CEO Reed Hastings and his team said in July that the slowdown is more about temporary issues rather than lost market share or a reduced appetite for its service, and Tuesday's report offers management a chance to back up that optimistic claim by showing strong engagement metrics. Netflix is expected to add about 3.5 million users to push revenue up 16% to $7.5 billion.

We'll learn just which content releases drove heavy viewership, with some likely blockbuster numbers around the release of Squid Game. But the big number to follow is the fourth-quarter outlook. Netflix is looking to accelerate subscriber gains late in the year with help from a flood of new TV and movie releases.

Procter & Gamble's costs

Procter & Gamble announces earnings on Tuesday morning, and investors are nervous heading into that report. While the consumer products giant has generally been growing sales and earnings at a faster rate than the industry, some caution flags showed up in the last report. Inflation started surging in the summer months despite strong volume trends.

P&G said in late July that these costs might take nearly $2 billion out of earnings in fiscal 2022. Shareholders will get an update to those expenses, plus offsetting cost cuts, this week.

Meanwhile, look for the Dividend King to show continued strength in financial areas, including cash flow and earnings growth. These wins should help cushion investor returns, including through dividends and stock buybacks, while P&G works through a period of increased earnings pressure from inflation.

Tesla's autonomous driving

Tesla thrilled investors earlier this month by revealing that it delivered 241,000 automobiles in the fiscal third quarter. On Wednesday, we'll get key context around that number, including profitability, cash flow, and updated estimates on the electric automaker's production rate given global shortages of key components like semiconductors. Tesla's wider 2021 outlook currently calls for deliveries to grow at a roughly 50% annual rate over time.

CEO Elon Musk and his team will likely discuss the expanding global supply chain, especially around the delivery of new cars in and around China. The company is also hard at work using artificial intelligence, plus its unmatched data set of real-world driving information, to build up autonomous driving capabilities.

Last quarter Tesla described this project as "a difficult engineering challenge," but one that's worth pursuing for the leading electric vehicle brand. Look for an update on progress toward that ambitious goal on Wednesday.

Demitri Kalogeropoulos owns shares of Netflix and Tesla. The Motley Fool owns shares of and recommends Netflix and Tesla. The Motley Fool has a disclosure policy.

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