(Bloomberg) -- Better-than-expected second-quarter results so far this reporting season have supported a rally in the S&P 500 Index, which is having its best earnings run in 25 years. About 75% of firms have exceeded estimates -- lower than the 87% for the whole season a year ago but still in-line with the pre-pandemic average, Bloomberg-compiled data shows. Yet with company executives on earnings calls discussing the potential for an economic slowdown more often than they have since April 2020, updates to company guidance may carry risk, as major reports this week from Uber to AMD brought full-year guidance cuts that came below estimates.
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Earnings highlights to look for next week:
Monday: AIG’s (AIG US) second-quarter results are due after-market close. Consensus estimates point to year-over-year growth in net premiums written for the sixth consecutive quarter, as Bloomberg Intelligence said the property and casualty business is supported by commercial price increases. Investors may watch for updates on the spinoff plan of its life insurance unit -- originally slated for 2Q -- after market conditions have become less accommodating, according to BI.
Tuesday: Coinbase (COIN US) is poised to see its first contraction y/y in monthly transacting users since it went public as crypto winter eats into second-quarter results, due to be reported after the close. But it’s not all doom and gloom for the cryptocurrency trading platform, which blamed an economic downturn when it announced global job cuts in June: Citi analysts said a potential for stablecoin legislation and increasing confidence of a ETH 2.0 merger in September could help reverse a slump.
Wednesday: Walt Disney’s (DIS US) fiscal third-quarter results, due after market close, will be closely watched after Netflix’s better-than-expected subscriber figures lifted sentiment in streaming services two weeks ago. Though the Disney+ service is projected to meet or beat full-year consensus expectations to add about 44 million subscribers, the loss of streaming rights to Indian Premier League cricket may force management to reduce its target of 230 to 260 million subscribers by fiscal 2024, said Bloomberg Intelligence. Still, it could still reach its subscriber target and boost profit through the introduction of an ad-supported tier later this year. Demand for Disney’s theme parks has been strong, and the segment may outperform expectations despite a $350 million hit from overseas closings.
- ESG in Focus: Disney is navigating a political minefield as it has recently drawn the ire of both Democrats and Republicans. The company lost its decades-old special tax status after Florida Governor Ron DeSantis said he would “fight back” against the company for its criticism of a Florida law that limits what educators can discuss about sexual orientation. Subsidiary Hulu was criticized by Democrats for refusing to air certain political ads, to which Disney responded by intervening and reversing the decision.
Thursday: Rivian (RIVN US) is scheduled to release its fiscal third-quarter results after the bell. The EV maker appears to have shrugged off supply chain snarls as it reaffirmed its full-year production target. That hasn’t stopped the company from trimming costs and cutting about 6% of its workforce on inflation, higher interest rates and higher commodity prices, it said in July. Though the company has a high cash balance, it may need more liquidity in 2025, earlier than it plans, as competition from Ford, Tesla and GM speeds up. Rivian may burn around $19 billion in cash through 2024 as it expands operations, while shareholders Amazon and Ford don’t appear to be capital sources. Rivian’s five-year default risk, at more than 16%, is similar to GameStop’s, said Bloomberg Intelligence. Shares were dragged down by automaker Lucid on Thursday after it halved production targets for the year, citing supply-chain issues. Still, electric vehicle companies shook off the gloom after peers Lordstown Motors and Nikola gave more upbeat updates.
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