After last week’s earnings disappointments from Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL), the two tech giants that investors were hoping would provide some solid support in this volatile market, hope—if there's any left—has shifted to a broader theme, managing the market's growing downside risk.
In this environment of uncertainty and fear, both the Dow and the S&P 500 have already wiped out this year's gains. The NASDAQ is the only one of the US major indices still holding on to any gains, year-to-date the tech heavy index remains up 3.3%.
During another week packed with earnings announcements, these three names are perhaps the most important. They could provide investors with some sense of the market's future direction .
1. Apple
The world’s most valuable company by market cap is scheduled to report fiscal Q4 2018 earnings on Thursday, November 1, after the market closes. In an environment when high growth tech giants are being punished for growth that's slowing, this Apple (NASDAQ:AAPL) may provide a breath of fresh air.
The main point of focus for investors will be the legacy tech company’s projections for the sale of its new iPhone series: XS, XS Max, and XR. A bullish demand forecast for the important holiday season, which is just round the corner, is likely to push Apple shares, which closed Friday at $216, out of their current bearish spell.
Still, over the longer term Apple is facing similar challenges to those that are keeping a lid on growth for other tech companies. An escalating trade war may hinder the company’s growth prospects in China, the world’s largest market for smartphones. It can also increase prices for American consumers, something the company has already warned about. The key test for Apple will be whether it can continue to juice more profit in a market where users aren’t too keen on flipping their phones quickly. As well, the question will be how fast can it diversify its revenue base.
Analysts surveyed by FactSet expect Apple to generate earnings per share of $2.78 for the September quarter, up from $2.07 a year earlier. These analysts also forecast that Apple will increase sales to $61.4 billion from the $52.6 billion it posted in sales a year ago.
2. Facebook
Facebook Inc.’s (NASDAQ:FB) third quarter earnings report will be released on Tuesday, October 30 after the market close. It's one of the most keenly awaited events of the week.
The social media giant is struggling to overcome challenges it’s facing after a series of data breaches including the Cambridge Analytica scandal which broke in early March, along with intense public and political scrutiny over the past year.
Since its disappointing previous earnings report in July, which missed revenue targets and showed slower-than-expected user growth and heavier spending to increase the security of Facebook's social network and free it from political manipulation, FB's stock has been severely punished, losing more than quarter of its value.
During this week's earnings report, embattled CEO Mark Zuckerberg must show investors how quickly he can fix the social media giant's problems without endangering the company’s super growth cycle. On average, analysts polled by FactSet, expect earnings of $1.46 a share, down from $1.59 during the same quarter a year ago, on $13.77 billion of sales.
3. Coca-Cola
Separate from tech and social media concerns, soft drink giant Coca-Cola (NYSE:KO) is also scheduled to Q3 2018 earnings on Tuesday October 30 before the market opens.
Fresh off the $5.1-billion acquisition of UK-based Costa Coffee chain, the world’s largest beverage company is likely to provide investors with further insight on how its entry into the hot beverage category will boost sales as consumers continue to shun sugary sodas. That headwind is so strong, it’s rattling many established brands and slowing sales growth in the category.
Over the past few years, Coke has been working to reduce the amount of sugar in its flagship drinks. It's also been adding a variety of low- and no-sugar alternatives, including soy-based beverages, teas, waters and juices, as a way to revive sales that have been sliding since 2012.
For the third quarter, which ended in September, analysts on average expect Coke to report $0.55 a share profit, up from $0.5 a share a year ago, on sales of $8.17 billion.