- GRIT
- Posts
- 👉 The Investing Week Ahead: 10/16/23
👉 The Investing Week Ahead: 10/16/23
Lululemon is added to the cool kids club, Tesla looks to surpass $25B in quarterly revenue...
Welcome to your new week.
The crisp, fall air has officially arrived — which is always a warning sign for a barrage of Q3 earnings reports. Let’s dive into everything you should be watching this week!
Key Earnings Announcements:
Tesla, Netflix, and a long list of heavy hitters are reporting this week.
Monday (10/16): Charles Schwab, ServisFirst Bank
Tuesday (10/17): Albertsons, Bank of America, BNY Mellon, Ericsson, Goldman Sachs, Interactive Brokers, J.B. Hunt, Johnson & Johnson, Lockheed Martin, Pinnacle, Prologis, United Airlines
Wednesday (10/18): Abbott, Alcoa, Ally, ASML, Discover, Lam Research, Morgan Stanley, Nasdaq, Netflix, P&G, Steel Dynamics, Tesla, US Bancorp
Thursday (10/19): American Airlines, AT&T, Blackstone, CSX, Intuitive Surgical, Nokia, Truist, TSMC, Union Pacific, WD-40, Western Alliance Bancorp
Friday (10/20): American Express, Autoliv, Comerica, Huntington, Regions, Schlumberger
What We’re Watching:
Tesla’s most recent earnings report highlighted a 9.6% operating margin, free cash flow of $1.0B, and deliveries / revenue that was approaching $25B for the first time in a single quarter.
Netflix’s most recent earnings report focused on the successful launch of paid sharing in 100+ countries — with paid net additions reaching 5.9M in Q2. Revenue of $8.2B and operating profit of $1.8B were both generally in-line with forecasts.
Investor Events / Global Affairs:
The auto strike continues, LULU strolls into the S&P 500, and Rite Aid hits rock bottom.
UAW Strike Could Seriously Impact General Motors (GM) and Ford (F)
GM and Ford are facing financial challenges due to mounting costs from United Auto Workers (UAW) strikes — which seriously threatens their ambitious EV plans. The strikes have already cost both companies over $500 million, and they are losing millions more with each day that passes.
There's a strong possibility of reduced capital spending, EV timeline delays, and even cost increases for consumers as a result. While some investors believe dividends and share buybacks will continue in the short term — concerns exist about cash reserves if a full work stoppage occurs.
GM has established a $6 billion credit line as insurance against an extended UAW strike.
Lululemon (LULU) Joins S&P 500
LULU stock surged to a 52-week high after it was announced that the company would be included in the S&P 500 — replacing Activision Blizzard (ATVI) after the acquisition from Microsoft (MSFT).
The stock saw an 8.4% increase to $409.53 — its highest price since April 2022. This boost is a common occurrence when a company is added to a major stock index — as anticipation of mutual funds and ETFs buying shares drives up the price.
Lululemon is the third-most valuable North American clothing retailer — with a market cap of $51B. Shares are up about +26% this year.
Rite Aid (RAD) Files for Bankruptcy
Struggling drugstore chain Rite Aid has officially filed for Chapter 11 bankruptcy protection in New Jersey as it faces the challenges of slowing sales, mounting debt, and lawsuits related to the opioid epidemic.
The company plans to significantly reduce its debt through a restructuring plan that includes evaluating its retail footprint and closing underperforming locations.
Lenders have agreed to provide $3.45 billion in new funding to support the restructuring. Rite Aid's revenue declined in its most recent quarter — leading to a lowered fiscal 2024 outlook and an expected full-year loss of between $650M-$680M.
The company has also faced increased competition from larger rivals like CVS and Walgreens, which have shifted toward healthcare-focused models.
Major Economic Events:
Retail Sales as we get closer to the holiday season should give a consumer sentiment heat-check.
Monday (10/16): Empire State Manufacturing Survey, Speech by Philadelphia Fed President Harker
Tuesday (10/17): Business Inventories, Capacity Utilization, Home Builder Confidence Index, Industrial Production, Retail Sales, Speeches by Fed Gov. Bowman, Minneapolis Fed President Kashkari, and Richmond Fed President Barkin
Wednesday (10/18): Building Permits, Fed Beige Book, Housing Starts, Speeches by Fed Gov. Cook, Fed Gov. Waller, and NY Fed President Williams
Thursday (10/19): Existing Home Sales, Leading Economic Index (LEI), Philadelphia Fed Manufacturing Survey, Speeches by Fed Chair Jerome Powell, Fed Vice-Chair for Banking Michael Barr, Atlanta Fed President Bostic, Chicago Fed President Goolsbee, and Dallas Fed President Logan
Friday (10/20): Speech by Cleveland Fed President Mester
What We’re Watching:
In August 2023 — data pointed to robust consumer spending despite high prices and borrowing costs. The biggest increases were seen at gas stations, as gasoline prices soared +10%. Notable decreases were seen in sporting goods / hobby / book / music stores (-1.6%) and furniture stores (-1.0%).
We’ll be keeping an eye on if retail sales can keep their positive momentum as the holiday season approaches.
If you’re starting your investing journey or are interested in buying T-bills yielding 5% or more, consider visiting Public.com.
Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
Reply