Admittedly I tend to stay away from trading earnings, just because of the unpredictability of it all.  A company makes money, but not as much as expected, and the stock tanks.  Or the company has losses, but not as much as expected and the stock rises in price.  Sure, you can dip your toes in for fun, but as long as you understand the risks of playing the earnings game.  I’m more of a capital preservation trader than a risk-taker but to each their own. 

As we’ve been discussing all week, it is good to pay attention to the news and forecasts that come from the earnings reports, and then we can try to determine where we’re going from here.

So far, it sounds like we’re still going to be in the land of volatility and chop over the next couple of months.  

Johnson and Johnson lowered 2022 revenue and earnings expectations to $93.8 billion, about $1 billion lower than previously reported.  J&J missed wall street expectations, but the company did grow 5% over the same period last year.  Their board of directors did approve a 6.6% quarterly dividend increase to $1.13 per share.  A tale of good news and bad news.

Zendesk (ZEN), the helpdesk software company, said it’s hiring an advisor to explore the potential sale of the company.  Shares at one point were up over 4%.  With a change in the overall market picture, I wouldn’t be surprised to see an uptick in mergers and acquisitions, especially in the tech market.  Can Peleton (PTON) find a buyer?

And as much as it pains me to mention, Roblox (RBLX) fell more than 3% after Goldman Sachs cut its recommendation from buy to neutral.  Those who subscribe to the Wealthy Investor Society know that Roblox is still on our list of companies who are behind the Metaverse.  It’s disappointing news in the short term, but if you talk to anyone with younger kids, chances are they will tell you all about Roblox.  

MARKETS

What I find interesting here is that Consumer Cyclical has had a strong week and day compared to its one-month performance.  Meanwhile, energy had a bit of a pullback while the rest of the market enjoyed a rally.  

 

TRADE IDEA

While maybe not the prettiest of charts, this one came across my desk today.  Airbnb (ABNB) is in the Consumer Cyclical sector, which is showing recent strength.  ABNB is a company that helps people rent out their homes to travelers and if our theory about pandemic exhaustion is correct, we could see summer travel pick up and Airbnb could see a jump and break through the resistance line.  Will higher prices at the pump keep travelers away?  

I normally like to invest in companies that have positive earnings-per-share that continue to grow year-over-year and ABNB doesn’t exactly fit that requirement, but it does interest me from a trading perspective.  And I certainly like to see sales are once again growing after the mess that was in 2020.  

 

TRADING EDUCATION 

Today’s trading education section is a plea to the readers out there. What would you like to see in this section in the future? Is there an indicator that you want to know more about? A trading strategy? More fun with option names like Iron Condors, Broken Wing Butterflies, or a Jade Lizard? How to hedge or fix option trades? Send us your feedback and it may be featured in a future article.

 

If you have any questions, comments, or anything we can help with, reach us at any time.

 

 

 

Jeff,

Editor, Wealthy Investor Society