2 Stocks to Buy After Earnings Sell Offs
Earnings season can be a volatile time for investors. It is difficult to predict how a stock will react to a company’s earnings report from the previous quarter. While one quarterly earnings report should not change the path of a company, it can seriously impact the price of the stock in the short term. This past week alone we have seen several stocks tumble due to slight misses of Wall Street expectations.
As investors, we have to determine if the disappointment is here to stay or if the company can rectify these shortcomings in the future. When these stocks sell-off, they can provide one of the best buying opportunities of the year. Here are two stocks to consider after a post-earnings drop-off.
Airbnb (NASDAQ: ABNB)
At first glance, the Airbnb earnings report from the first quarter was a good one. It’s also good at second and third glances as well. In fact, it’s hard to find any holes in the most recent quarter from the vacation rental company. Airbnb’s stock did not fall until the company mentioned weaker guidance for the next quarter and that year-over-year comparable from the second quarter of 2022 would be difficult to match.
Does that justify a near 15% fall in stock price this week? I’m not so sure. Airbnb reported its first-ever GAAP profitable first quarter as it reported a net profit of $117 million. Despite the sombre tone for the second quarter, Airbnb expects it to be a busy summer season which means it is anticipating a strong third quarter. A 15% drop in price because of one weak quarter with nearly impossible-to-beat comparables? For context, the second quarter of 2022 was when travel restrictions were lifted in many countries for the first time since the start of the pandemic. The company also announced its new Airbnb Rooms project which will allow you to rent individual private rooms within a host’s property. I think Airbnb will be perfectly fine and a much larger company five years from now and am happy to pick up shares at these discounted prices.
The Walt Disney Company (NYSE: DIS)
I bet some of you thought I would be writing about PayPal ($59.85|0.34%). I decided to throw a curve ball and talk about the sell-off from Disney’s stock. The company is being punished for Disney+ subscribers coming in lower-than-expected for the quarter. Remember when this happened to Netflix (NASDAQ: NFLX) a couple of years ago? That platform turned out fine and it doesn’t have the other revenue streams that Disney has.
Disney is also being hurt by the Hollywood writer’s strike that is currently going on. The strike has already shut down the production of several Disney projects. Shares of Disney were down by nearly 10%. I expect the second half of 2023 to be better for Disney as returning CEO Bob Iger continues to cut costs. If this is the Netflix moment for Disney, this could be a tremendous buying opportunity for what is still the premier entertainment brand in the world. Now all we need is for Iger to reinstate the dividend and I think the stock could provide some nice returns by the end of the year.