Money & Markets Week Ahead for the week of August 16, 2021: It’s a quiet week for IPOs, so let’s look ahead to the rest of 2021.
Retail is a big theme this week. I preview earnings for a sector stalwart: Walmart Inc. (NYSE: MWT). And a key sales report should give some insight into how consumers are spending their hard-earned money during the economic recovery.
On the 2021 IPOs Front
Big names have hit the public market, including Robinhood Markets (Nasdaq: HOOD), Coinbase Global Inc. (Nasdaq: COIN) and Squarespace Inc. (NYSE: SQSP). The last two went public through direct listings.
But we’ve hit a midsummer IPO lull, so I want to do something a little different this week. Let’s look ahead to some 2021 IPOs that are on our radar. Here are three companies that could make a splash later this year.
Stripe
This has the potential to be the biggest IPO in history. Stripe is an online payment processor (think PayPal) for “millions of companies of all sizes,” according to its own website. It creates the infrastructure these companies need to make transactions easy.
There isn’t a set date for this IPO yet, but Stripe’s valuation is already estimated at $95 billion. To put that in perspective, Coinbase was valued at almost $86 billion after its IPO launch in April.
InstaCart
Certain businesses thrived during the height of the COVID-19 pandemic in 2020. InstaCart was one of them. The online grocery-delivery business offered a crucial service amid lockdowns, and it changed the way people shopped for essential goods.
InstaCart is currently valued at around $39 billion after some fundraising earlier this year. It will be interesting to see how this company adapts as in-person shopping ramps up again. But the delta variant may be another tailwind for this innovative service.
There is not a date set for the InstaCart IPO yet, but there’s a good chance it will land in 2021.
Rivian
The autonomous electric vehicle (EV) space is getting crowded, and Rivian is ready to grab a slice of that market. The Rivian IPO should hit the market in late 2021, and it could hit a $70 billion valuation, according to Business Insider.
Rivian was founded in 2009, and it plans to begin delivery of two consumer EVs in 2021. It also has an order for 100,000 commercial vans for e-commerce giant Amazon.
Deep Dive: Walmart Earnings Preview
Earnings season is slowing down, but there are a few big names still on the docket.
I want to highlight retail giant Walmart Inc. (NYSE: WMT). It is scheduled to report quarterly numbers on Tuesday.
Walmart Doesn’t Miss on Earnings Often
In March 2020, during the height of COVID-19, Walmart shifted its business model to manage its losses. It upped its online presence to compete with e-commerce behemoth Amazon and focused on its grocery business as consumers spent more on necessities.
It beat earnings-per-share (EPS) expectations in the last three quarters of 2020 before suffering a slight hiccup in the first quarter of 2021 (the final quarter of its fiscal year). Walmart bounced back in its most recent quarter, reporting $1.69 EPS growth compared to $1.21 expectations.
WMT Hopes to Keep Revenue Streak Alive
Walmart will be going for its sixth-straight quarterly beat. In Q2 2021, its $138.3 billion reported revenue crushed expectations by more than $6 billion. It was a 2.7% increase year-over-year, buoyed by strong online sales. It noted 37% growth in its U.S. e-commerce sales and 49% growth internationally.
The skinny: Analysts have high expectations after such a strong quarter. EPS growth is forecasted at $1.54, and revenue is expected to come in at $135.8 billion.
I don’t see why Walmart can’t beat those numbers again. Shoppers are back in stores, and e-commerce sales should remain strong as some consumers have adopted new spending habits.
This isn’t an exciting stock to own, but its numbers prove it’s a solid performer doing the right things in an evolving retail space.
Data Dump: Core Retail Sales
With the economy open again, economists and investors want to know how consumers are responding.
The Census Bureau’s Core Retails Sales report provides key insights into how much consumers are spending on retail items, excluding automobiles. July figures are set to drop on Tuesday.
Retail sales have not been smooth month-to-month. Sales surged 8.4% higher in April, largely due to the wider availability of the COVID-19 vaccine. Since then, sales have looked a lot more like they did pre-pandemic.
Retail Sales Fluctuate Post Pandemic
The skinny: Economists are only forecasting a 0.1% increase for July after sales surged 1.3% higher in June. That’s a pretty safe expectation, which means no one feels bullish or bearish on this aspect of the economy. This might signal a true “return to normal.”
July’s report may not reveal much about the state of the economic recovery, but this metric is one to watch as the world wrestles with the delta variant over the coming months.
Earnings Reports
To finish off the Money & Markets Week Ahead, here’s a look at some of the key earnings reports due out this week:
Monday
Roblox Corp. (NYSE: RBLX)
Tencent Music Entertainment Group (NYSE: TME)
Tuesday
Walmart Inc. (NYSE: WMT)
Home Depot Inc. (NYSE: HD)
Sea Ltd. (NYSE: SE)
Wednesday
NVIDIA Corp. (Nasdaq: NVDA)
Cisco Systems Inc. (Nasdaq: CSCO)
Target Corp. (NYSE: TGT)
Thursday
Applied Materials Inc. (Nasdaq: AMAT)
Estee Lauder Companies Inc. (NYSE: EL)
Ross Stores Inc. (Nasdaq: ROST)
Kohls Corp. (NYSE: KSS)
Friday
Deere & Co. (NYSE: DE)
Foot Locker Inc. (NYSE: FL)
Hibbett Sports Inc. (Nasdaq: HIBB)
Best,
Chad Stone
Assistant Managing Editor, Money & Markets
