Second Quarter Revenue Reports

The first week of Earnings season is over. Income reports usually start with financial companies, as in the current season. Last week, the reports were from a number of the digital banking giants, Pepsi and Netflix attracted the attention of many investors. In this brief review, we will see what happened last week.

Pepsi was first. After lockdown restrictions increased in the second half of the last quarter, creating a crisis for many companies, some used it as an opportunity – beverage producers were one of them, and this included Pepsi. Because people stayed home, they had more sales during the epidemic as more people were eating, drinking and watching movies. Exactly the same reason that helped Netflix, the largest online movie platform. However, the second quarter was slightly different.

Netflix reported a 15.77 million increase in paid subscribers worldwide for Q1, as restrictions eased and reopening’s improved, while Pepsi managed to maintain its market share and increase revenue. For Netflix, that seems to mean lower expectations for new subscribers, especially for the second half of the year.

The banks are the main players in government stimulus packages. Like the government, they always consider their long-term plans as more important than short-term ones, and so they were expecting to earn less for the current quarter, especially after the Fed cut interest rates sharply overnight. Net income fell by $5 billion (10%) at four major US banks, according to Reuters.

On the other hand, as mentioned in the case of short-term and long-term income, what we have been facing in recent months has been forcing people to have short-term deposits and even more so in the form of cash in the bank, this is not in the interest of the banks because they can not make long-term investments with their liquidity, and in the short term, it is deadly for them, and this one of the reasons why banks’ shares fell, even though most of them met expectations, as you can see in the chart. However, as tensions and fears subside, banks are shifting some of this capital to higher-yield securities, which generates revenue for them. So in general nothing has changed, only the path has changed a bit.

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Ahura Chalki

Market Analyst

HotForex

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