Volatility continued to rock the stock market last week as both the Dow Jones Industrial Average and the S&P 500 declined by 1% after having risen by nearly 4%. Investors digested earnings reports, plus indications of slowing economic growth and rising interest rates.
Earnings season continues in the week ahead, and below, we'll look at a few highlights from the long list of announcements on the way from Electronic Arts (EA 0.69%), Beyond Meat (BYND 19.70%), and Roblox (RBLX 0.59%).
1. Electronic Arts' fiscal 2023 outlook
Electronic Arts steps up to the earnings plate on Wednesday, and investors have some big questions heading into that report. The video game developer has enjoyed solid growth in recent quarters, with gamers enthusiastically downloading and making digital purchases within franchises like Apex Legends, Madden NFL, and The Sims.
But the digital entertainment industry is seeing some big shifts in early 2022, with many companies, including Netflix and Activision Blizzard, reporting slowing engagement and user trends. The big worry heading into EA's report is that the video game giant will show a similar deceleration as it kicks off its new fiscal year.
Investors shouldn't read too much into a modest slowdown in late 2022, given how much growth EA has enjoyed over the past two years. Annual cash flow has jumped to nearly $2 billion compared to $1.5 billion before the pandemic struck. That's why, if EA can continue producing engaging content, investors should see solid returns from owning the stock.
2. Beyond Meat's sales trends
For a growth stock, Beyond Meat hasn't been posting much growth lately. The plant-based meat specialist's sales declined 1% in late 2021, in fact, thanks to a 20% decline in sales at supermarkets and warehouse retailers in the fourth quarter. Management said, at the time, that demand would bounce back once its delayed product launches hit shelves. But there have also been indications that consumers are less willing to experiment with meat substitutes today.
Beyond Meat's sales trends on Wednesday will help answer those big demand questions. Investors will be especially interested to see whether its retailing business is recovering with help from products like Beyond meatballs and Beyond chicken tenders. If these flavors struck a chord in early 2022, then CEO Ethan Brown and his team will have some firm data to support their bullish long-term outlook for the business.
3. Roblox's user base
Investors are bracing for some bad news when Roblox announces its latest earnings results on Tuesday. The digital entertainment platform's stock has declined nearly 70% since the start of 2022 as Wall Street frets about an upcoming growth hangover. That impending slowdown, plus Roblox's operating losses, has investors feeling less excited about the business.
But Roblox has a bright future ahead, given its massive user base and its early bets on the metaverse. Look for CEO David Baszucki to highlight that engaged user base on Wednesday as he articulates an updated outlook for the business in 2022 and beyond.