What to expect from Snap, Ford Motor and MicroStrategy earnings❓

Snap (SNAP.US), MicroStrategy (MSTR.US) and Ford Motor (F.US) are scheduled to report earnings reports for the October - December 2023 period today after close of the Wall Street session. A quick preview of each of the three reports can be found below!

Snap (SNAP.US) - Shares are down nearly 3% before the opening. 

• The company announced today that it will lay off 10% of its workforce and is considering the need for additional layoffs. Such a comment ahead of the report adds an element of uncertainty to the report, according to analysts at Rosenblatt Securities;
• It may suggest that profitability is still below expectations (cost-cutting is needed). Snap is largely funded by debt, making it extremely dependent on the advertising market's economic conditions. It's also essential to consider the risk from the growing competition such as TikTok or Meta's 'family' of applications. 
• The company's operating margin may experience a slight increase due to cost-cutting and layoffs in 2023, but overall pressure on profitability may persist, also due to investments in AI infrastructure that is intended to compete with the software of much larger companies;
• The announcement of layoffs may suggest that the environment for Snap is becoming more favorable, and the benefits from it can be enhanced by expense reductions, which the company intends to stick to for the benefit of shareholders

Comment

• If the recent trend on Snap's stock is to be any indication, it would suggest that the growth environment for the company's advertising and subscription program profits is quite favorable; it may already be reflected in the stock price
• Evercore analysts highlighted a more favorable environment for the advertising market (with growing hopes for a soft landing of economies and interest rate cuts). Looking at the somewhat surprisingly low expectations, the forecasted ARPU seems low, considering that Q4 2022 was decidedly less optimistic for the advertising industry than Q4 2023.

Forecasted adjusted EPS: $0.06 (over 50% y/y decline, expectations increased by 10% in the last 30 days).

Forecasted revenues: $1.38 billion (Bloomberg consensus predicts a 6.7% y/y increase)

• Estimated revenues in North America: $875.9 million (2% y/y decrease)
• Estimated revenues in Europe: $245.1 million (12.9% y/y increase)
• Estimated revenues in other parts of the world: $262.51 million (over 30% y/y increase)
• Daily estimated active users: 411.59 million vs. 375 million in Q4 2022
• Estimated total worldwide active users: 214.82 million
• Average revenue per user (ARPU): $3.33 vs. $3.47 in Q4 2022
• Estimated average revenue per user in North America: $8.63 vs. $8.77 in Q4 2022

Estimates for Q1 2024

• Estimated revenues: $1.11 billion
• Estimated adjusted EBITDA loss: $35.1 million
• Daily estimated active users: 418.55 million

Source: xStation5

Ford (F.US) - Ford's shares are gaining slightly before the opening, following yesterday's decline of 4.6%

Investors will focus on how quickly and how strongly the company can limit losses on electric vehicle sales while simultaneously increasing sales and profits from the portfolio of combustion engine cars. In recent quarters, colder weather negatively affected the range of electric vehicles, and lower gasoline prices in the US prompted consumers to choose combustion engine cars, potentially supporting Ford in Q4 2023. The company's main competitor, General Motors, pleasantly surprised Wall Street last week with optimistic estimates.

• Bloomberg Intelligence estimates that electric vehicle sales in the US will increase by only 9% this year, after a 65% increase over the last three years. Morgan Stanley emphasizes that lower electric vehicle sales dynamics could turn out to be positive for Ford. On the other hand, still very high interest rates limit overall demand for cars.
• Ford has reduced production of the F-150 Lightning 'plug-in' pickup by half, while adding employees to the Michigan factory producing traditional combustion engine cars (Bronco, Ranger). 
• Electric vehicle sales fell by 11% in January 2024, and a significant 51% for the Mustang Mach-E. The company plans to cut investments in electric vehicles by a record $12 billion.
• Ford is expected to release a full-year profit forecast, providing investors with a broader picture of the impact of costs associated with the new contract with the United Auto Workers union (33% wage increase, estimated by Ford to add around $900 per vehicle).
• Wall Street remains relatively optimistic about sales in 2024, considering a 42% increase in hybrid model sales in January and an approximately 4.3% increase in sales of all models (with almost 11% lower y/y electric vehicle sales). Any forecasts that would disrupt this fundamentally positive picture for the company could lead to investor pessimism.

Estimated adjusted EPS: $0.13

Estimated Ford Blue revenues: $14.52 billion (Bloomberg consensus)

• Estimated adjusted net profit: $988.2 million
• Estimated adjusted EBIT margin: 3.16%

Ford's stock price recently reached a key resistance level at 200-session moving average (around $12 per share), where it reacted with a sharp decline. Potentially better-than-expected results and estimates could open the way for the shares to climb to as high as $17.5 per share. On the other hand, negative surprises could lead to a test of $10 area, where we observe a 71.6% Fibonacci retracement of the upward wave from 2020 and previous price reactions, as well as the lows from 2023.

Source: xStation5

MicroStrategy (MSTR.US) - shares are trading flat before the opening

The performance of MicroStrategy's stocks will undoubtedly be strongly correlated with the results of Bitcoin itself, which the company regularly acquires, making it the core foundation of its business. The role of quarterly reports is significantly limited, considering that the company has essentially become a Bitcoin holding; usually, it exhibits much more volatility than the cryptocurrency itself. The results for Q4 2023 will not determine the stock price in the current quarter, as the share price will continue to follow the dynamics of the Bitcoin market.

Source: xStation5