The stock market skyrocketed in 2020 and defied all expectations following a stunning setback of the coronavirus bear market in February and March. The rebound was brought about by the speed with which some companies shifted gears to adapt to radical changes in economic and business conditions, as well as the optimism of investors to look beyond the immediate impact of the COVID-19 pandemic for a better future to provide.
Now 2021 is here, and investors are trying to figure out which direction the stock market is going to take in the coming year. Bulls are looking forward to the introduction of coronavirus vaccines to get the economy back on track, while fearing that anything less than a full return to normal could disappoint the markets. Speculations about what the coming months will look like lead the spectrum from euphoric to apocalyptic.
Earnings reports give investors the truth they need to get past emotional highs and lows and accept reality. And on Wednesday, January 27, the stock market will truly have its day of reckoning. On that day, investors receive three key earnings reports from appeal (NASDAQ: AAPL), Boeing (NYSE: BA), en Tesla (NASDAQ: TSLA) which can cause markets to rise or fall.
Image source: Boeing.
Take a flight or get into trouble?
Boeing will launch on the morning of the 27th. The aviation giant is expected to announce its fourth-quarter results ahead of the opening clock on Wednesday morning, with a webcast and a conference call at 10:30 a.m. EST.
From a business perspective, Boeing was lagging behind all year in 2020. The company originally hoped to launch its 737 MAX aircraft by the beginning of last year, but it was not until December that Boeing finally got the go-ahead from the Federal Aviation Administration to put the aircraft model back in the air. Although the aircraft manufacturer received a significant order Ryanair, large numbers of cancellations continued to flow in, mainly because the airline industry was collapsing due to travel restrictions and the reduced demand.
Even before Boeing got better, its stock climbed sharply from its lows. After losing more than 70% of its value in March, Boeing more than doubled by the end of the year. This still left the share price far below where it started in 2020. But the current price reflects a lot of optimism for a company that has suspended its dividend and the losses could continue until 2021.
Investors will take a closer look at what CEO David Calhoun and his team have to say about Boeing’s prospects for 2021. If they are not convinced of Calhoun’s strategy, Boeing could face more turmoil, and the stock market could draw many conclusions about the health of the entire industrial sector.
Image source: Apple.
Apple has high hopes for iPhone 12
Apple has become the largest tech company in the world, with a market capitalization of more than $ 2 billion and climbing. After another meteoric rise in 2020, many investors are worried that even well-deserved praise for the launch of the 5G iPhone 12 could potentially cause Apple’s share prices to rise too quickly.
All indications are that Apple’s fiscal performance in the first quarter, which will come after the closing clock on January 27, should be strong. Delayed orders for the high-end iPhone 12 Pro remain high, even with a four-digit price, and some customers have to wait a few more weeks to be shipped. This forced Apple to increase production volume in the first half of this year, and suppliers gave positive guidance indicating that better times lie ahead. Apple also sees revenue coming in a healthy way as the App Store gained sales during the holiday season.
Nevertheless, Apple shares are now trading more than 25 times even with the most optimistic forecast for 2022, which would require the average annual growth rates of 20 to 25% from the fiscal 2020 level. It’s not impossible, but it’s ambitious, even with the headwinds Apple gets from the product upgrade cycle. Investors will want to hear what CEO Tim Cook and his team have to say at 5pm EST on the 27th.
Image source: Tesla.
Does Tesla have anything left in the tank?
Finally, Tesla (NASDAQ: TSLA) will be expected to announce its earnings after the market closes on January 27th. This will be followed by a live webcast for questions and answers starting at 18:30 EST.
The Tesla share rose by more than 700% in 2020. This has increased the interest for the electric car manufacturer to maintain its growth rate.
Investors have already got a good idea of what the fourth quarter looked like there. Deliveries of more than 180,500 vehicles bring the total for the year just under Tesla’s 500,000 target. Tesla produced nearly 180,000 vehicles in the fourth quarter, bringing the total to nearly 510,000 by 2020.
However, Tesla’s earnings report will fill in some gaps. Net income and free cash flow will give a better picture of how efficiently Tesla works, along with how large a contribution regulatory credit sales make to its profits. Shareholders also want to know what CEO target Elon Musk is for 2021, as well as when to expect new vehicles to be available.
What could hurt Tesla going forward, however, is an extremely optimistic outlook for 2021. Investors are accustomed to seeing strong growth in the core industry and also want to see continued progress in key areas such as autonomous management, battery technology, and broader sustainable energy equipment. If they are disappointed, Tesla’s big run could come to an end.
Do not miss it
The next eight days there will be a lot of moving news, so it’s not like anything is going to happen between now and January 27th. However, if you have to choose one day this earnings season to pay attention to the market, the last Wednesday of January is the one to look at.