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Earnings Watch: Shopify stock falls after outlook disappoints, Activision tries to break from ‘Fortnite’ curse

February 12
21:52 2019

Shopify Inc. continues to benefit from growing interest in e-commerce, but the company’s spending plans seem to be giving investors some pause.

Shares of Shopify SHOP, -1.97%  were down 2.7% in Tuesday morning trading after the company topped expectations with its latest results but delivered a light forecast for operating income in the quarter and year ahead. The company’s outlook “favors growth over margins,” wrote Baird analyst Colin Sebastian, though he thinks the company’s latest numbers suggest a strong long-term trajectory.

The company broke down a number of key investment areas for 2019 on its earnings call, discussing international growth and product expansion. Shopify makes tools that enable businesses to create websites and engage in commerce across multiple channels.

Under Armour Inc. UA, +5.48% UAA, +6.42%  was also on this morning’s agenda, reporting what Bernstein’s Jamie Merriman called “as uneventful” a quarter as the company could have posted. The sportswear company sees a number of headwinds for the first quarter, including higher sales to off-price channels. Under Armour expects a better landscape as the year goes on, and its stock is up 3.8% in morning trading.

Other notable reports

•U.S. Foods Holding Corp. USFD, -1.36%  gave an in-line earnings outlook, though Guggenheim’s John Heinbockel sees this forecast as potentially conservative “with inflation picking up, independent case growth recovering, and supply chain opportunities on the horizon.” Shares are off 2%.

•Molson Coors Brewing Co. TAP, -8.80%  reported a mixed quarter, but the big news is that the brewer will restate its 2016 and 2017 financials due to “material weakness” in its reporting controls. The stock is down 7% in Tuesday’s session.

Coming up this afternoon

Sentiment isn’t particularly high headed into Activision Blizzard Inc.’s ATVI, +2.19%  earnings report this afternoon.

Peers Take-Two Interactive Software Inc. TTWO, -4.71%  and Electronic Arts Inc. EA, +3.03%  both delivered disappointing outlooks last week, spooking Activision investors as well. The fear is that the major publishers aren’t reacting quickly enough the “battle royale” craze made popular by Fortnite, a title from Epic Games.

But while EA’s stock has rallied since the company’s earnings report, Activision’s stock keeps getting punished. The latest source of concern: a Bloomberg report saying that the company is planning to cut “hundreds” of jobs. Management will likely have to address that report, the Fortnite threat, and the year-ahead pipeline on Activision’s earnings call.

Don’t miss: Electronics Art stock pops after detailing early ‘Apex Legends’ popularity

Joining Activision on the afternoon slate are Akamai Technologies Inc. AKAM, +0.85% TripAdvisor Inc. TRIP, +0.64% and Twilio Inc. TWLO, +0.58%  

Emily Bary is a MarketWatch reporter based in New York.

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