Without a doubt the market has been moving in a quite unstable direction lately, inflation has hit its all-time high levels, reaching 9.1% in the U.S., and 8.6% in the Eurozone.

Not only inflation but another possible Covid wave and the hot weather, are threatening factors for the economy and our population. However, the trading community is being caught in this situation additionally. “How?” - you may ask.

During this month, important Quarterly earnings reports were released. They are important financial reports that provide a market glimpse on how stocks will most likely be valued in the near future and their movement. Stock prices tend to rise when earnings results exceed market expectations while disappointing earnings results tend to lower share prices.

It’s important to note that stock prices move strictly based on market expectations. A 30-percent increase in quarterly income may not be seen as positive if the market expectation is 50 percent. In the same way, a 20 percent decrease in earnings may cause a stock to go up if the expectation is a much larger decline.
The end of this month is here, so we are going to dive into the results of Q reports that are already published.

Huge corporations like Tesla, Netflix, The Walt Disney Company, Starbucks, eBay, Airbnb, Uber, Zoom, Nvidia, and Alibaba already reported and made public their results during the first half of August, so let’s turn to the very important details of the hottest Q reports that currently have a huge influence on traders.

Starbucks (SBUX)

Starbucks reported its Q3 results on 02.08.2022.

Unlike other US coffee vendors, Starbucks exceeded analysts’ expectations in its Q3 2022 quarterly earnings, which was mainly caused by the increased demand for its cold coffee drinks.

CEO Howard Schultz said that customers of the coffee house company are not reducing their spending which is a key element for working in favor of the better-than-expected results. Starbucks’s CEO also praised the company’s pricing strategy and its customer’s loyalty to keep up with their patronage.

In its quarterly earnings report, it revealed that net sales advanced 9% to $8.15 billion. In addition, global same-store sales were up by 3%, primarily due to stronger performance in the US. In its home market, the company saw another 9% increase in same-store sales.

Starbucks managed to open 318 net new stores, ending the period with 34,948 stores in a total of which 51% are company-operated and 49% licensed.

They reported net income attributable to the fiscal third quarter of $912.9 million, or 79 cents per share. This is lower than the previous year’s $1.15 billion or 97 cents per share.

Starbucks will be joining the NFT business by the end of the year, they hinted that the initiative would include unique and exclusive customer experiences and branded digital collectibles.

eBay (EBAY)

eBay reported its Q2 results on 03.02.2022.

They managed to deliver better than expected Q2 results while continuing to make significant progress on their long-term initiatives and goals. eBay reported a greater position than the period when we entered the pandemic, despite the shocking numbers of inflation that affect the world and an uncertain macro environment, they luckily remain on track.

The world-leading e-commerce reported earnings per share of 99 cents in the second quarter, beating a Street estimate of 89 cents per share and revenue of $2.4 billion, down 9% year-over-year.

eBay also reported a gross merchandise volume of $18.5 billion, down 18% year-over-year.

The CEO said a “focus category strategy” is working and added that payments and advertising are helping with the overall growth.

First-party advertising hit $232 million in the second quarter, up 2% year-over-year.

Airbnb (ABNB)

Airbnb was enthusiastically following the path of the two previously mentioned businesses. Their results were quite clear, impressive and stronger-than-expected. In terms of earnings and revenue in line with estimates.

Booking’s competitor reported revenue standing at $2.10 billion. In the year-ago period, the revenue was $1.33 billion, a jump of 58% happened on good behalf of the company. The revenue is in line with estimates of $2.11 billion.

Moving on, earnings were growing alongside their revenue. Airbnb reported a net income of $379 million. In the year-ago period, the company reported a loss of $68 million.

In Airbnb’s history, this is the most profitable quartal.

They also reported more than 103 million nights and experiences booked. That is the largest quarter number ever. However, the number was below the estimated amount of 106.4 million nights and experiences before..

Uber (UBER)

Investors impatiently waited for the results of this transportation company. Sad to say so, but the results were quite disappointing. Uber reported a net loss of $2.6 billion for the second quarter however beats analysts’ expectations in terms of revenue.

Gross bookings of $29.1 billion were up 33% year over year and in line with its forecast of $28.5 billion to $29.5 billion.

But Uber won’t give up easily, hoping for a better third quarter they announced new changes that may attract and most importantly keep new drivers. The drivers will be able to choose the trips they want and will be able to see how much they’ll earn before they accept a trip.

Alibaba (BABA)

Alibaba reported fiscal first-quarter earnings on August 4th that beat expectations of experts, making its stock grow higher.

The giant Chinese e-commerce reported revenue of 205.55 billion Chinese yuan ($30.68 billion) vs. 203.19 billion yuan that were expected, remaining the same year-on-year.

Earnings per American depositary share (ADS) were 11.73 yuan vs. 10.39 yuan expected, down 29% year-on-year. And the Net income that the company reported is 22.73 billion yuan vs. the 18.72 billion yuan expected.

This is the first time in Alibaba’s existence that it remained flat on year-over-year growth. Even with staying flat in terms of earnings and revenue Alibaba is constantly working on being original and expanding.
Under its China commerce business, they are trying to expand revenue and users for its discounting platform called Taobao Deals and work on implementing grocery and fresh food service called Taocaicai. The Hangzhou-headquartered company sees these new businesses as a way to attract less wealthy customers in smaller Chinese cities.

Zoom (ZM)

Zoom Video Communications' quarterly earnings report was released on August 28. The report refers to the fiscal Quarter ending Jul 2022.

Zoom’s revenue in the second fiscal quarter grew 8% since last year, slowing from 12% growth in the prior quarter, according to a statement. The second fiscal quarter ended on July 31. Zoom’s net income fell to $45.7 million in the quarter from $316.9 million in the year-ago quarter as the company increased spending on sales and marketing.

They earned $1.05 per share, adjusted, vs. 94 cents per share as expected by analysts, according to Refinitiv.

And lastly, the revenue was $1.10 billion, vs. $1.12 billion as expected by analysts, according to Refinitiv.

The company said at the end of the quarter it had about 204,100 enterprise customers, which are business units that Zoom’s direct sales teams, resellers, or partners work with. That’s up less than 3% from 198,900 three months earlier.

Nvidia (NVDA)

On August 24, 2022, Nvidia reported revenue for the second quarter ended July 31, 2022, of $6.70 billion, up 3% from a year ago and down 19% from the previous quarter.

GAAP earnings per diluted share for the quarter were $0.26, down 72% from a year ago and down 59% from the previous quarter. Non-GAAP earnings per diluted share were $0.51, down 51% from a year ago and down 63% from the previous quarter.

During its Q2 period, Nvidia experienced growth in the gaming sector and its data centers.

Is the Quarterly Earnings Season the right time to trade stocks?

Earnings reports are a good way to see if there is value in your investment. If you follow them regularly, you will be more likely to spot a buying opportunity or decide that it’s time to sell an underperforming stock.

Earnings season is especially crucial for traders in growth stocks. Growth stocks are typically expected to grow at higher rates than the rest of the market, so if their earnings reports are positive, they represent a big potential to traders.

It could be a good idea to reduce exposure to growth stocks before an earnings report to hedge against possible short-term swings in price. Should the stock fall, but confidence remains high, it could prove to be a good buying opportunity, and should the company report weak earnings and the price fall, your exposure will be minimized. Nevertheless, with CFD trading you are able to buy and sell CFD stocks regardless of the price movement.

Take a look at our Trading Conditions and learn more. 

Conclusion

Earnings season is the period of time during which a large number of publicly traded companies release their quarterly earnings reports. In the month of August, many quarterly earning reports are made public. We took a look into Starbucks, eBay, Airbnb, Uber, Zoom, Nvidia, and Alibaba as freshly brought out reports, most of their stocks saw a significant increase and their revenue and earnings also experienced a jump. Will this positive outcome last, we are going to see it in the next earnings season scheduled for 2022.

August is a very active time in the market as participants (analysts, traders, and investors) review the earnings reports, which may affect their positions on the company as a whole. You can often see a lot of movement in the shares of companies releasing reports as the market reacts to the new data.