Money & Markets Week Ahead for the week of June 27, 2021: Earnings reports continue to taper off as we near the July 4 holiday. I look at a legal documents IPO and tell you what to expect from Carnival Corp.’s (NYSE: CCL) earnings as cruise lines hit the high seas again.
We’ll also get data about consumer confidence.
Here’s more of what to watch in the week ahead on Wall Street:
On the IPO Front
There are a few initial public offerings (IPO) on the calendar this week.
LegalZoom.com plans to price its IPO on Thursday. It will list on the Nasdaq under the ticker symbol LZ.
What it is: LegalZoom was started in 2001 by Robert Shapiro — one of the lawyers on O.J. Simpson’s defense team.
The company specializes in helping people create legal documents like wills, company incorporations and trademark applications without lawyers or fees.
In its S-1 filing with the Securities and Exchange Commission, 10% of new limited liability companies and 5% of new corporations formed in the U.S. used LegalZoom to create and file the necessary legal documents in 2020.
In 2020, LegalZoom generated $470.6 million in total revenue — based on 1,085 subscriptions. That was up from $408.3 million generated the year before.
In the three months ending March 31, 2021, the company reported total revenues of $134.6 million compared to $105.8 million reported in the same three months of 2020 — a 27.2% increase in top-line revenue.
The company increased its year-over-year net losses from $7.4 million in 2019 to $9.8 million in 2020.
The offering: The company plans to sell 19.1 million shares at a price range of $24 to $27 per share.
The intent is to raise around $488 million with the offering.
Investors BlackRock and Neuberger Berman have stated interest in purchasing up to an aggregate of $150 million in shares. TCV has already agreed to buy $90 million shares in a concurrent private placement
According to Renaissance Capital, at a midpoint of $25.50 per share, LegalZoom would see a market value of $5.3 billion.
JPMorgan, Morgan Stanley, Barclays, Bank of America Securities, Citi, Credit Suisse and Jefferies are all bookrunners on the deal.
The skinny: LegalZoom has grown in popularity over the years by offering small businesses and individuals a low-cost way to handing certain legal affairs.
This is not the first time the company filed an IPO.
In 2012, LegalZoom filed for an IPO but later postponed the offering, then withdrew it after two years.
I’m not sure of the growth potential for LegalZoom. Its growth from 2019 to 2020 was good but not strong enough to consider an IPO investment.
I would wait and see where this listing goes before adding it to your portfolio.
Deeper Dive: Carnival Corp. Earnings
Popular cruise line Carnival Corp. (NYSE: CCL) will report its earnings this week.
Tuesday, the company will release its earnings for the quarter ending May 30, 2021.
The Miami, Florida company offers cruises with destinations to the Caribbean, Mexico, Europe, Alaska, Hawaii, Australia, New Zealand and the South Pacific.
Carnival Earnings Rocked By COVID-19
COVID-19 lockdowns took a massive toll on the cruise industry — and Carnival was no exception.
Before 2020, the company had a pattern of consistent earnings, with higher earnings coming in the third quarter — the height of the cruise season.
In 2020, however, earnings dropped into deep negative territory as all cruises halted to prevent the spread of the pandemic.
Until then, Carnival beat Wall Street expectations for earnings in nine of 11 quarters. During the pandemic, the company only beat expectations once.
Carnival Quarterly Revenue Plummets in 2020
Carnival’s quarterly revenue took a huge hit in 2020 due to no ships sailing.
Like its earnings, Carnival’s revenue was consistent with spikes during the peak cruise season before 2020.
In 2020, its quarterly revenue dropped to an average of $197 million — helped by $700 million reported in the first quarter.
For context, Carnival’s average quarterly revenue before 2020 was more than $4 billion.
Wall Street is projecting the company to report earnings of minus $1.61 per share on revenue of $193.5 million.
The skinny: Last year was brutal for cruise companies like Carnival.
And 2021 hasn’t started much better with first-quarter revenues of only $26 million.
The obvious thing to help Carnival will be to get its ships back on the water and customers taking cruises again.
Until that happens, things are going to continue to be rough for Carnival.
Money & Markets Week Ahead: Data Dump
We’ll see just how confident U.S. consumers are in the economy when the Conference Board releases its monthly consumer confidence index on Tuesday.
The index is a result of surveys asking about consumer attitude, buying intentions, vacation plans and expectations for inflation, stock prices and interest rates.
Readings over 100 typically suggest strong confidence. Below 100 signifies weaker confidence.
U.S. Consumer Confidence Climbing Past 2020 Lows
Consumer confidence struggled during the COVID-19 pandemic — with the index falling below 100 from April 2020 to August 2020.
In recent months, however, the index has clawed back to over 100 and inching closer to pre-pandemic levels.
It means consumers are gaining more confidence in the post-COVID economic recovery.
Analysts are projecting the index reading for June will be 118.8 — slightly higher than May’s 117.2.
To finish off the Money & Markets Week Ahead, here’s a look at some of the key earnings reports due out this week:
Herman Miller Inc. (Nasdaq: MLHR)
Global Cord Blood Corp. (NYSE: CO)
Carnival Corp. (NYSE: CCL)
FactSet Research Systems Inc. (NYSE: FDS)
Micron Technology Inc. (Nasdaq: MU)
Constellation Brands Inc. (NYSE: STZ)
Walgreens Boots Alliance Inc. (Nasdaq: WBA)
McCormick & Company Inc. (NYSE: MKC)
Acuity Brands Inc. (NYSE: AYI)
No major earnings scheduled.
That’s all for this week.
Until next time…
Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. He is a certified Capital Markets and Securities Analyst with the Corporate Finance Institute. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.