With earnings season well underway, three very speculative stocks will unveil their Q1 numbers to nervous investors, but has the time for speculation passed?
By this point in earnings season, I am usually numbed to the reports I write, especially after Big Tech has had its say. I usually write the same thing again and again:
- “Apple (NASDAQ: AAPL) reported higher than expected wearables sales but iPhone growth dropped.”
- “Microsoft’s (NASDAQ: MSFT) Azure cloud segment is on the rise.”
- “Amazon (NASDAQ: AMZN) is on the cusp of world domination etc.”
On and on it goes, and that’s not to say it isn’t interesting, but it can get repetitive. Today might well be the most exciting market day so far this year. Not only will Disney (NYSE: DIS) unveil the damage this pandemic has caused it, but 3 of the most speculative stocks on the market will show us their books today:
Beyond Meat (NASDAQ: BYND), Virgin Galactic (NYSE: SPCE), and Enphase Energy (NASDAQ: ENPH).
What can investors expect from these ‘meme stocks’, when they announce earnings tonight?
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Beyond Meat Earnings Preview
As an investor in Beyond Meat myself, I am cautiously optimistic going into this earnings call, while others may be hoping for the best in a challenging situation. As of Friday 1 May, Beyond’s stock was up 21.1% year-to-date, rising a further 4% on Monday in anticipation of earnings, compared to the S&P 500 (NYSEARCA: VOO), which has fallen more than 11% in 2020.
2019 was a good year for Beyond, despite its rollercoaster performance, and is still up roughly 270% since its May 2019 IPO. Last year, net sales rose 212% to $98.5 million, topping expectations of $79.5 million, with retail sales growing 199% to $40.6 million, and foodservice growing 223% to $57.8 million.
And that last sentence is where the worry comes from. Beyond Meat has significant exposure to the foodservice channel, the same channel which has been devastated by the COVID-19 pandemic. As restrictions did not come in until the end of the quarter, 2020 guidance of $490 million to $510 million net revenue has not changed, but Beyond will likely pull this as it counts its losses in the foodservice sector in Q2.
Wall Street is now estimating 2020 revenue of $465.5 million, on growth of 53.2% YOY. This is 6.9% below Beyond Meat’s current guidance at the midpoint. Really, we won’t know what lies in store for the world’s leading plant-based meat manufacturer until the end of Q2.
Enphase Energy Earnings Preview
Another rollercoaster stock, Enphase was on course for a meteoric rise worthy of Tesla (NASDAQ: TSLA), jumping 55% from January to February. Then COVID-19 hit, and it sank 34% in March due to the company’s manufacturing exposure in China. It is still up 49% year-to-date though.
Investors are optimistic about Enphase’s earnings, especially given its track record over the past 2 years, where it has beaten earnings per share and revenue estimates 6 out of 8 times. Meanwhile, in the past 3 months alone.
The company’s exposure to China’s shutdown seems to have been limited, and with life in the Asian powerhouse coming back to normality, Enphase may even be able to provide accurate guidance for production in Q2 and onwards.
Analysts are expecting the company to report $165.2 million in revenue, an increase of 64.98% from last year’s first-quarter. For the fiscal year, analysts expect a profit per share of $1.03, compared to $0.95 in the same period last year, and for revenue estimates to average $780.4 million, after 2019 saw $624.3 million.
Virgin Galactic Earnings Preview
Last Wednesday, I posed the question of whether Virgin Galactic investors should be worried, and the answer is yes!
The company is significantly exposed to the downturn in the fact that its main benefactor, Richard Branson of Virgin Group, is facing massive financial concerns of his own due to the pandemic, meaning he will have less capital to invest in his speculative space venture.
How it performed in Q1 2020 will serve as a key test regarding its financial viability. Analysts are anticipating revenue of just $650,000 with losses per share of $0.18.
In Q4 2019 the company reported a laughable $500,000 in revenue, while net losses came in at $73 million, bringing the 2019 total to $210 million. To make matters worse, on Friday, May 1, after the close of trading, Virgin Galactic filed an S-1 form with the Securities and Exchange Commission, advising that certain “selling stockholders” of the space tourism company intend to sell a combined 150.5 million shares of Virgin Galactic stock. This amount of shares represents 71.5% of all shares outstanding.
This suggests that Virgin Group is getting ready to liquidate almost its entire 115 million share-stake in the company. Hopefully, shareholders will learn more at the Q1 earnings call.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.