Everything You Need To Know This Week: 5/2May 02, 2022
Today we're bringing you all the news you need to know for this week in just 5 minutes!
This report contains information on the most important stock market & economic news that are can't miss events. On top of this, we've not only told you what they are, but we gave you the best way to "play them"!
As continues to be the theme, this week we're not covering any IPOs because most private companies are skipping them until economic conditions recover!
Monday, May 2nd:
MGM Resorts International (MGM) Stock
On Monday, May 2nd, MGM will report its first-quarter profits. Investors will be paying more attention than usual to this next earnings call since the resort and casino industry have been extensively scrutinized in recent years due to legislative reforms.
On top of this, MGM reported today that they will be buying the European mobile gaming company, LeoVegas, for $607M in all cash. This move is extremely interesting because the US right now is the hot area for rapid expansion due to relaxed legislation. But with MGM going after European expansion, this could either signal a) they believe Europe to be a bigger/easier opportunity to address and/or b) they believe the US's opportunity is too crowded for them to win.
Either way, this acquisition will be a lot to unpack in the upcoming weeks. But for now, investors will at least need to have a clearer understanding of where the firm is headed in the next few quarters from the upcoming earnings release.
MGM Resorts has a lot of potential to profit from the growing popularity of sports betting but the industry is highly competitive as Ceasars, DraftKings, and a few others continue to eat up market share.
So given the present economic climate & the competitive landscape, we advise holding MGM Resorts until we get more clarity from earnings and the acquisition.
When there is more money available in the economy & clarity on the M&A front, the casinos and resorts business will be able to grow extensively further.
Tuesday, May 3rd:
Pfizer (PFE) Earnings:
On Tuesday, May 3rd, Pfizer will issue its earnings report. As the pandemic draws closer and closer to a "close" this will be a fascinating stock to keep an eye on.
In the short term, Pfizer intends to reward its shareholders with a higher dividend in order to restore their faith in the firm. By doing so, Pfizer is effectively betting on themselves as they distribute funds to their stockholders.
In the long term, Pfizer continues to innovate by creating new treatments. However, the pandemic provided them with substantial income streams -- so the question now is where they will go from here?
Looking down the road it appears that Paxlovid, its pill for treating Covid-19, failed to show benefit as a preventive therapy in recent trials. Paxlovid was poised to become one of the fastest-selling drugs of all time, with $24 billion in projected 2022 sales, according to analytics group Airfinity Ltd. With the news coming out of the latest trials, Pfizer may see a huge hit in projected global sales.
Therefore we are recommending a hold on Pfizer until we get a bigger update on their drug pipeline post-COVID.
While Pfizer saw a lot of success from the pandemic, many investors are unsure if this will continue in the long run.
Wednesday, May 4th:
Uber (UBER) Earnings:
On Wednesday, May 4th, Uber is expected to disclose its earnings report. Uber has a track record of positive financial reports, but the ride-sharing business is concerned about the current economic climate.
Uber is well-known for having a very functional app that its consumers love. But it'll be interesting to see if they've been able to maintain their performance in the present economic climate. This earnings report will be closely watched by investors.
So with Uber down 45% in the last year, and concerns about economic conditions coming into play, you may be asking, "Is now the right time to get in or get out?"
In the long run, we are optimistic about Uber because we expect EBITDA to grow substantially over the nearer term. We also believe bookings data should outperform as well as their delivery segment. While the stock may very well continue to bleed in the short run, we think Uber has a lot of room for growth over the next several years as valuations looked to have finally normalized.
Wednesday, May 4th:
Jerome Powell Press Conference:
On Wednesday, Jerome Powell is giving his first in-person press conference since March of 2020.
In case you don't know who this is, Jerome Powell is the chairman of the Fed (Federal Reserve). It is his job to decide and announce interest rate and monetary policy for the United States.
During this conference, we're expecting him to reiterate his stance on trying to fight inflation. That's why we're expecting him to continue forth with his push for raising rates over the course of 2022 and beyond.
With inflation still sky high and GDP decreasing, this is all but a lock. This shouldn't scare the markets too much as we believe this is mostly priced in at this point!
Thursday, May 5th:
Shopify (SHOP) Earnings:
On Thursday, May 5th, 2022, Shopify will report its profits. Shopify is expected to announce a solid result after several of its competitors have struggled.
Last week, Shopify's shares dropped dramatically in response to Amazon's dismal announcement. Sales on Amazon were sluggish, and this is anticipated to spread throughout the sector.
So why did this happen? Largely due to the slowdown in retail-based spending. Inflation is constraining eCommerce spend and therefore expectations around the sector are dropping. Add in valuation re-pricing across the tech sector and this largely speaks to why SHOP is down so much YTD.
That's why in the short term we're pushing Shopify from an OW rating to the Hold position. However, in the long term, the opportunity for Shopify is still massive.
They only have 8% of market share and we believe they will be one of the big winners in the space. Learn more about it 👇