This earnings season is showing which companies can ride out — or, indeed, benefit from — the economic storm, and which ones are at risk of being swept away.
Struggling regional banks like First Republic aside, there's already one prominent casualty: Bed Bath and Beyond. The home goods merchant has been struggling for years, but things took a turn for the worse in 2023. In January, the company warned investors it's running out of cash and is considering bankruptcy. On Sunday, its warning became reality as the company filed for Chapter 11 bankruptcy protection. It's a stunning reversal for the shares: A year ago, Bed Bath and Beyond shares traded around $20; yesterday, they were $0.2, one-hundredth of last year's value.
Samsung, likewise, is warning its profit for the first quarter might be its lowest in more than a decade amid a slump in the memory chip market.
Economic troubles, however, didn't put a dent in the profits of LVMH. The luxury conglomerate's first-quarter sales hit a record high of 79.2 billion euros ($87.1 billion). Its figures are set to continue smashing records, if the company's prediction that China's Covid reopening will boost its sales further comes true.
Fast-moving consumer goods didn't fare too badly either — at least for Coca-Cola, which saw net sales rise 5% to $10.98 billion, beating estimates. The company is also optimistic for the rest of the year, expecting revenue to continue growing 7% to 8%.
Despite those big pieces of news, stocks in both the U.S. and Europe were flat. The S&P barely moved, the Dow Jones Industrial Average added 0.2% and the Nasdaq slipped 0.29%.
Investors are waiting for more earnings report from major companies, particularly big tech, before making moves. Alphabet and Microsoft will be first up later tonight in the U.S., followed by Meta on Wednesday and Amazon on Thursday. Investors will want to assess those reports alongside economic data, such as first quarter's GDP growth (or lack thereof) and April's consumer sentiment, coming out this week.
"Everyone's just waiting for tech earnings," said Chris Harvey, head of equity strategy at Wells Fargo Securities. "This is a very, very busy week for earnings, so we're just treading water." But traders should brace themselves. A big wave is coming; some companies will sink, but some will ride the wave.
