Facebook hopes to pick up where Google and Snap left off, in crazy earnings day

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Alphabet Inc. and Snap Inc. have warned about severe downturns in the online-advertising market in the past week, and seen their stocks head higher.

Facebook Inc. FB, +6.41% can only hope to extend that trend.

Facebook has already said that it is experiencing record usage but seeing advertisers slash their marketing budgets — that means more costs to support consumers desperate to connect with others while stranded at home during the COVID-19 pandemic, but no guarantee that anyone is paying higher rates to advertise to those users. Wednesday afternoon, Facebook will put some more numbers behind those statements with first-quarter results.

Facebook in the Age of COVID-19: Will advertisers spend during spread of coronavirus?

But investors don’t seem to mind that too much. Snap SNAP, +5.97% disclosed that ad sales were shrinking by double-digit percentages when it revealed first-quarter numbers last week, and Alphabet executives provided similar numbers about Google GOOGL, +8.65% GOOG, +8.59% on Tuesday afternoon. Snap stock enjoyed its second-best day ever in response to earnings, and Alphabet shares headed higher in after-hours trading Tuesday and dragged Facebook and Twitter Inc. TWTR, +7.57% along for the ride.

Snap and Google were both able to stave off fears of a prolonged downturn, and it will be up to Mark Zuckerberg and Sheryl Sandberg to do the same when they speak Wednesday afternoon — if they can grab the attention from several other high-profile earnings reports, including Microsoft Corp. MSFT, +3.66% and Tesla Inc. TSLA, +2.32% . Wednesday offers one of the most packed days of earnings this season, with 37 members of the S&P 500 SPX, 2.97% and two Dow Jones Industrial Average DJIA, 2.60% components scheduled to report.

Here are some of the other highlights.

• Tesla’s short-term pain may translate to long-term gain, but first investors have to learn about the tough parts Wednesday afternoon. “We believe Tesla took the brunt of China’s slowdown in Q1, while Q2 is more likely to reflect weakness in the U.S. and European markets,” JMP Securities analyst Joseph Osha wrote. While Osha expects the company to be “materially impacted” by the pandemic this year, he and some other analysts also believe that Tesla can emerge from the crisis in a relative position of strength because rivals may have to scale back their electric-vehicle ambitions to survive the near term. Ford failed to meet even lowered sales and earnings estimates Tuesday.

• Microsoft’s cloud-computing business and collaboration tools likely saw a big boost in the March quarter as the COVID-19 outbreak accelerated demand for digital services, but the strength there may be balanced against more troubled parts of the business Wednesday afternoon. Windows, server products, search, and LinkedIn could face pressure amid the crisis and weigh on Microsoft’s overall performance, Cowen & Co.’s Nick Yako wrote.

• Boeing Co.’s BA, +9.98% rocky flight is set to continue as the company deals with a sudden collapse in air travel alongside its existing 737 Max woes. The good news is that the pandemic isn’t an “extinction-level event” for Boeing or the air-travel industry, according to Benchmark analyst Josh Sullivan. It may even give the company an excuse Tuesday morning to make beneficial strategic changes. “Backlog support [for the 777x] was already wavering pre-COVID-19; however, the disruption now gives Boeing cover to pull back on what were previously likely too aggressive production plans,” he wrote.

• Mastercard Inc. MA, +6.31% offers a morning read on the consumer-spending landscape, and investors will find out how much of a cushion the e-commerce tailwind is giving to payments companies as they witness a dramatic decline in in-store spending and cross-border travel. “With a rebound in the stock, coupled with what is likely to be a deteriorating set of volume metrics heading into the June quarter (heavily influenced by weak cross-border volumes), we believe the setup into the print tilts negative,” RBC Capital Markets analyst Daniel Perlin wrote.

Another look at spending trends comes from eBay Inc. EBAY, -0.05% later in the day.

• The COVID-19 outbreak served as a lifeline for struggling Blue Apron Inc. APRN, -25.13% , and the company will share how its logistics arm met the rising demand for its meal kits. Blue Apron should also give an early look at retention and satisfaction trends as it looks to keep customers on board even after consumers can more easily get food from outside their homes.

• Chip customers are looking to build up inventory, but Qualcomm Inc.’s QCOM, +3.69% markets “don’t look healthy,” Bernstein’s Stacy Rasgon wrote. He’s worried about a smartphone market that was already weak, as well as trouble in the automotive sector. Qualcomm’s afternoon report could also offer some early indications about what the coronavirus crisis means for the 5G landscape. Many smartphone makers were expected to make 5G devices a priority this year, but the coronavirus outbreak may force delays.

Originally Published on MarketWatch

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