Money & Markets Week Ahead for the week of July 28, 2021: Earnings season is in full swing again. I break down expectations for tech giant Apple Inc. (Nasdaq: AAPL). I also provide some insight into the much-anticipated Robinhood IPO dropping this week.
We’ll also see how consumer confidence fared in July.
Here’s more of what to watch in the week ahead on Wall Street:
Big Market Debut: Robinhood IPO
There are several initial public offerings (IPO) on the calendar this week.
Robinhood Markets plans to price its IPO on Thursday. It will list on the Nasdaq under the ticker symbol HOOD.
What it is: Robinhood was established and is based in Menlo Park, California.
The company operates an online stock trading app and bills its mission as “to democratize finance for all.”
According to its S-1/A filing with the Securities and Exchange Commission, Robinhood has 18 million funded trading accounts and 17.7 million monthly active users of its app.
In 2020, Ryan Speciality generated $958.8 million in total revenues — up from the $277.5 million the company reported in 2019.
In the three months ending March 31, 2021, the company reported total revenues of $522.2 million compared to $127.6 million reported in the same three months of 2020 — a 309.2% increase in top-line revenue.
The company increased its year-over-year net income from minus-$106.5 million in 2019 to $7.4 million in 2020.
The offering: The company plans to sell 55 million shares at a price range of $38 to $42 per share.
The intent is to raise around $2.2 billion million with the offering.
According to Renaissance Capital, at a midpoint of $40 per share, Robinhood would see a market cap of $33.4 billion.
Goldman Sachs, JPMorgan, Barclays, Citi and Wells Fargo Securities are all bookrunners on the deal.
The skinny: For my take on the Robinhood IPO, check out this episode of The Bull & The Bear podcast.
Deeper Dive: Apple Inc. Earnings
Earnings season is in full swing again, and most of the FAANG names are slated to report quarterly numbers this week.
Apple Inc. (Nasdaq: AAPL) will try to keep its earnings streak alive when it reports on Tuesday. The iPhone maker has been busy on a lot of fronts, so we’ll get to see how that reflects in the numbers.
Apple Earnings Have Rebounded Since 2020 Q2
Apple beat expectations on earnings per share in the last four quarters following the COVID-19 crash in 2020. That’s a great sign considering it had a streak of nine-straight earnings misses dating back to the second quarter of 2018 before that.
The tech giant blew away analysts last quarter, reporting $1.40 EPS against expectations of only $0.98.
The trend shows that Apple’s earnings per share are much higher in the fourth quarter due to strong holiday sales.
Expectations for the second quarter 2021 are pretty much in line with the previous quarter at $1 EPS, so we’ll see if AAPL can repeat.
Revenue is a different story.
Apple doesn’t like to disappoint on this front, and it has only missed revenue expectations once in the last four years.
AAPL Doesn’t Miss on Revenue
The tech giant reported revenue of $89.5 billion in late April. That was $12 billion higher than analysts projected.
Its quarterly revenue trend is similar to its EPS … higher in the fourth quarter of each year due to the holiday retail season.
The big names on Wall Street lowered expectations to $73 billion for Tuesday’s report, so we’ll see if Apple can blow them away again.
What to expect: Apple faces a couple of issues as we head deeper into the second half of 2021.
The tech company is still dealing with supply constraints following the height of the COVID-19 pandemic. Flooding in China may also affect its output as many of its factories are located there.
Apple’s iPhone is its money-maker. Demand for its 5G-enabled iPhone 12 should drive a good chunk of its revenue. But competition within the 5G space is high.
Money & Markets Week Ahead: Data Dump
The Conference Board will reveal the July reading of its monthly Consumer Confidence Survey on Tuesday.
The survey measures consumer attitude, buying intentions, vacation plans and consumer expectation for inflation, stock prices and interest rates.
Consumer Confidence Hits 12-Month High in June
Consumer confidence reached a 12-month high in June as the index read 127.3.
That is a level of confidence not seen since before the COVID-19 pandemic. It’s an indication that consumers are more optimistic about the economic future of the country.
Expectations are for consumer confidence to scale back slightly to 125.8 for July.
Earnings Reports
To finish off the Money & Markets Week Ahead, here’s a look at some of the key earnings reports due out this week:
Monday
Tesla Inc. (Nasdaq: TSLA)
Lockheed Martin Corp. (NYSE: LMT)
Tuesday
Apple Inc. (Nasdaq: AAPL)
Microsoft Corp. (Nasdaq: MSFT)
Alphabet Inc. (Nasdaq: GOOGL)
Visa Inc. (NYSE: V)
Wednesday
Facebook Inc. (Nasdaq: FB)
PayPal Holdings Inc. (Nasdaq: PYPL)
Pfizer Inc. (NYSE: PFE)
McDonald’s Corp. (NYSE: MCD)
Thursday
Amazon.com Inc. (Nasdaq: AMZN)
Comcast Corp. (Nasdaq: CMCSA)
T-Mobile US Inc. (Nasdaq: TMUS)
Yum! Brands Inc. (NYSE: YUM)
Friday
Berkshire Hathaway Inc. (NYSE: BRKa)
Exxon Mobil Corp. (NYSE: XOM)
AbbVie Inc. (NYSE: ABBV)
Caterpillar Inc. (NYSE: CAT)
That’s all for this week.
Until next time…
Safe trading,
Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He is a certified Capital Markets & Securities Analyst with the Corporate Finance Institute and a contributor to Seeking Alpha. Prior to joining Money & Markets, he was a journalist and editor for 25 years, covering college sports, business and politics.