Stocks fell last week as first-quarter earnings season officially kicked off. The Dow Jones Industrial Average (^DJI +1.79%) dropped 1% and the S&P 500 (^GSPC +1.20%) declined 2% after investors digested the first announcements from big banks and financial institutions.
Earnings season ramps up in the week ahead, with hundreds of notable reports on the way. Let's take a closer look at three, from Netflix (NFLX 9.71%), Procter & Gamble (PG +2.67%), and Tesla (TSLA +3.01%).
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1. Netflix's new outlook
Netflix's stock has cratered in 2022 along with many other tech giants' shares. But there's also a concrete reason for the streaming video specialist's slump. Its growth rate in late 2021 fell below its pre-pandemic level, leaving many investors wondering if the company's best days are behind it.
Tuesday's earnings report will shed new light on that mystery. Management forecast that subscriber gains will be weak in Q1, saying in late January that their prediction of just 2.5 million additions is "not sandbagged at all."
While membership engagement has remained strong, Netflix isn't winning new subscribers as easily lately, and it's not clear whether that slump has to do with competition, temporary demand swings tied to the pandemic, or something else.
NASDAQ: NFLX
Key Data Points
Watch for a new outlook that answers some of those questions. The good news is that, even if Netflix isn't on track to rebound from 2021's weak performance of 18 million member additions (compared to 37 million in 2020), it is still likely to boost profitability while achieving positive cash flow.
2. Procter & Gamble's prices
Investors have turned to P&G shares in recent weeks as a way to ride out the volatile market with an inflation-proof stock. Its earnings report on Wednesday will determine whether that optimism was warranted.
The consumer-staples titan likely enjoyed steady growth in early 2022, given its positive market share trajectory. And shareholders are looking forward to rising cash returns from higher dividend payments and stock buybacks.
But there's also a big worry on top of investors' minds this week. We don't know whether P&G can pass along price increases without threatening its sales expansion. That challenge could scuttle earnings growth, which slowed to just 2% in the previous quarter compared to 18% a year earlier.
Still, P&G owns one of the most impressive supply chains in the industry. That asset, along with its dozens of popular home care and personal healthcare brands, should power solid long-term returns for the stock.
3. Tesla's production pace
Tesla's early April announcement revealed that the company boosted its delivery volume by 68% year over year. Investors were hoping for slightly higher growth, yet the stock is still up heading into Wednesday's report.
That optimism will be tested this week as CEO Elon Musk and his team detail how well the company's production rates have held up through supply chain shortages, cost spikes, and COVID-19 disruptions in China and other markets around the world.
We'll also receive key updates around operating cash flow, profit margin, and the relative popularity of its different electric vehicle model sales. Look for executives to keep their focus on the bigger picture, though, including Tesla's push toward fully autonomous driving.
