2 Earnings Calls I’m Watching for Next Week
We’re deep into the heart of earnings season and so far it’s been a successful one for big tech but a mediocre one for most other companies. That likely speaks to the difficult economic environment we’re still in. Next week, there are two companies that notably stand out for me as stocks I regularly follow. Here are the two earnings calls I’m watching next week.
Coinbase (NASDAQ: COIN)
Coinbase will report its earnings on February 15th and I’m very intrigued as to how it will do. First of all, it won’t include any of the spot Bitcoin ETF data because those were approved in January. This will include the very bullish November and December rallies which should translate to higher trading fees and increased revenue. Coinbase’s performance is inexplicably tied to the performance of Bitcoin itself. The company holds quite a bit of Bitcoin in its reserves and always benefits from an improved interest in cryptocurrencies. Historically, Coinbase’s earnings reports have been a bit of a crapshoot. Technically speaking, Bitcoin’s breakout and re-test flipped a strong resistance level into support recently. This means that the stock has found a stable footing and it showed as shares rose by more than 10% this week. But of course, a bad earnings call doesn’t care about technical analysis. Given its strong chart and entering a window of bullish Bitcoin seasonality, I think you could risk buying a few out-of-the-money calls. Tech companies have been mostly rewarded this quarter and I think most people will be bullish on crypto and Coinbase moving forward. Sentiment often can beat out actual figures when it comes to a company’s outlook.
Shopify (NYSE: SHOP)
It’s been a good year so far for Shopify to say the least. The stock has followed in the footsteps of its big brother Amazon (NASDAQ: AMZN) and has even received some recent price target upgrades from analysts. Shopify’s market cap has grown back to nearly $120 billion and is once again trading at an inflated valuation. With a price-to-sales ratio of more than 17, you are paying a premium for a stock that has already gained more than 22% this year. If you think I am bearish on Shopify for the long term, you’re wrong. I think Shopify has an excellent product and will continue to grow in the future. But Shopify often gets lumped in with the likes of Amazon and it simply cannot pull other revenue levers like the mega-cap tech company. Shopify does not have an AWS or Whole Foods it can look to. I love the company but I believe that over the short-term, we could see a bit of a pull-back. If you want to play Shopify’s earnings, I would lean more toward buying puts than calls for this quarter.