Weekly Preview: Earnings to Watch This Week (BILI, COUP, DOCU, SFIX)

fridday was another reminder that sometimes “good news” for the economy can be perceived as “bad news” for stocks. Despite a better-than-expected May jobs report, stocks were punished on Friday to end another rough session, booking sharp losses for the day and for week.

Nonfarm payrolls grew by 390,000 in May, according to the Labor Department. That number, while surpassing the 318,000 that had been expected, also meant that unemployment stayed at 3.6% which is above estimates of 3.5%. Elsewhere, average hourly earnings growth came in 0.3%, and below expectations for 0.4%. All told, it wasn’t a perfect jobs report, despite the beat. Nevertheless, it did little to allay investor concerns that the Fed will maintain its aggressive stance regarding interest rate increases.

On Friday the Dow Jones Industrial Average fell 348.58 points, or 1.05% to close at 32,899.70. The S&P 500 index lost 68.28 points, or 1.63%, to end at 4,108.54. The tech-heavy Nasdaq Composite Index declined by 304.16 points, losing 2.47%, to close at 12,012.73. Regarding the “good news taken as bad news” mantra, it seems the economy continues to expand and there are tons of jobs for those who are seeking them. However, a competitive labor market is forcing employers to pay top dollar for talent.

That combined with rising inflation, a challenging supply chain, and eroding consumer spending makes it tough for companies to grow. And that has shown in the first quarter earnings and guidance that has been issued. There is also the persistent fear of a recession borne from the Fed’s monetary tightening. Unlike last week, dip buyers didn’t come save the day. It will be interesting to see if this trend continues. And that’s where investor patience and discipline for high quality stocks — despite the back-and-forth between price and value — have to kick into high gear.

On the earnings front, here are the stocks I’ll be watching this week.

Coupa Software (COUPReports after the close, Monday, Jun. 6

Wall Street expects Coupa to earn 5 cents per share on revenue of $190.69 million. This compares to the year-ago quarter when it earned 7 cents per share on revenue of $166.93 million.

What to watch: Shares of Coupa, a provider of a cloud-based corporate spend management software, have declined more than 20% over the past thirty days, while posting near 60% declines in six months. And on a year-to-date basis, the stock has lost more than 50% of its value, while the S&P 500 has declined just 12%. The company has been dragged down by the recent punishment in tech stocks on fears of rising interest rates and inflation. Aiming to become a BSM (Business Spend Management) leader, Coupa makes money by analyzing large quantities of corporate transactional expense data, looking for spending patterns and areas of inefficiency. With its total addressable market measured at $56 billion and growing, Coupa’s platform helps customers with actionable insights that can lead to improved inventory management, smarter purchasing decisions, while lowering expenditures. But concerns about slower growth and Coupa’s valuation has kept new investors away. The company on Monday can change that narrative by delivering a top- and bottom line beat, along with confident guidance.

Bilibili (BILIAReports before the open, Thursday, Jun. 9

Wall Street expects Bilibili to lose 63 cents per share on revenue of $757.99 million. This compares to the year-ago quarter when it lost 39 cents per share on revenue of $604.71 million.

What to watch: Shares of the Chinese video sharing platform hasn’t escape the wrath of the market’s displeasure for high growth tech stocks that show a lot of promise but aren’t yet profitable. But as China’s go-to video platform for the young generation, with an estimated 80% user base being younger than 35 years old, there is tons of untapped potential for Bilibili. The company is backed by three strong supporters in Alibaba (BABA), Sony and Tencent. The latter owns a 13.3% stake, while Alibaba and Sony have respective stakes of 7.2% and 4.98%. The company has enjoyed tremendous growth, keeping its 272 million monthly active user base engaged for long periods of time. The market, however, wants to know when the company can become profitable. Management on Thursday will need to outline its path towards profitability and sustained revenue growth to re-energize investors.

docuSign (DOCU) – Reports after the close, Thursday, Jun. 9

Wall Street expects DocuSign to earn 46 cents per share on revenue of $581.85 million. This compares to the year-ago quarter when earnings were 44 cents per share on revenue of $469.08 million.

What to watch: Shares of DocuSign have gotten clobbered over the past twelve months, falling 60%, including more than 65% in the past six months. The shares are down 42% year to date, compared to the 12% decline for the S&P 500 index. The company last quarter guided to downbeat growth for FY23 with bookings only forecast to grow at a meager 7% clip which sparked a selloff in the stock. But is now a good time to buy? The e-signature leader enables individuals and businesses to digitize the agreement process. DocuSign benefited from immense growth at the height of the pandemic as corporations shifted to remote work, but with the pandemic being less of an issue, the market has become concerned about its ability to maintain its impressive growth. It revenue peaked more than a year ago and has decelerated ever since. The company ending FY22 with billings growth of only 25%, which is down significantly from 56% in Q4 2021. To reverse the negative downward trend in the stock price, DocuSign must issue strong revenue growth forecast for next quarter and fiscal year 2022.

Stitch Fix (SFIX) – Reports after the close, Thursday, Jun. 9

Wall Street expects Stitch Fix to lose 54 cents per share on revenue of $493.29 million. This compares to the year-ago quarter loss of 18 cents per share on revenue of $535.59 million.

What to watch: Shares of the online personal styling company Stitch Fix have been punished over the past year, plunging almost 85%, including a 15% decline in the past thirty days. Now down 55% year to date, against the 12% decline in the S&P 500 index, investors want to know if all of the bad news is priced in. Aside from fears of competitive pressures having emerged, investors have become concerned about Stitch Fix’s ability to sustain profitability over time. The company’s inability to effectively market its Freestyle product, which forced it to cut its guidance, is one glaring headwind. The product allows consumers to shop clothes on Stitch Fix via artificial intelligence data for immediate purchase, unlike the standard service where a package with four are items are sent to customers to select from. The company has also been losing active clients. Most recently, active clients was reported at only 4.02 million, down from 4.17 at the end of fiscal 2021. To reverse the decline in the stock, on Thursday the market will want to see revenue growth acceleration, along with improved profit margins. Upside guidance for the next quarter and fiscal year would also be a major step forward.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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