Money & Markets Week Ahead for May 23, 2021: The ZipRecruiter IPO will launch as companies struggle to hire… And I break down the earnings expectations of a big player in the artificial intelligence field: Nvidia.
We’ll also get a peek at consumer confidence for May.
Here’s more of what to look for in the week ahead on Wall Street:
On the IPO Front
There are a few initial public offerings on the calendar this week.
The most notable is ZipRecruiter Inc. The ZipRecruiter IPO will price its direct listing on Thursday.
The company plans to list on the New York Stock Exchange under the ticker ZIP.
What it is: ZipRecruiter is a website that matches available employees with jobs.
It is considered a ‘matchmaker’ that shows job opportunities for those looking for work and viable candidates for employers who have positions to fill.
It competes with similar sites like Indeed, Monster and CareerBuilder.
In its S-1 filing with the Securities and Exchange Commission, ZipRecruiter said it has 110 million job seekers across many industries and 2.8 million employers active on the site.
ZipRecruiter saw its total revenue drop slightly during the COVID-19 pandemic.
In 2020, its total revenue was $418.1 million compared to $429.6 million the year before.
Despite the drop in top-line revenue, ZipRecruiter reported a net income of $86 million in 2020. In 2019, that net income was a loss of $6.3 million.
This year has started strong, with first-quarter revenues at $125.4 million compared to $113.3 million in the same quarter of 2020.
The offering: This is a direct listing, so the company won’t raise any new capital from the IPO as registered shareholders will be selling stock, not the company.
The direct listing means company shareholders will not be subject to a 180-day lock-up period, which is common in most IPOs.
Registered stockholders plan to sell nearly 86.6 million Class A shares.
According to Renaissance Capital, ZipRecruiter’s management estimated fair value for a share was $25.04 per share.
If the ZipRecruiter IPO is priced at that point, it could see a market value of $3.3 billion.
Goldman Sachs, JPMorgan, Barclays, Evercore ISI, William Blair and Raymond James will be financial advisors on the deal.
Because this is a direct listing with no firm commitment offering, there are no underwriters on the deal.
The skinny: This is the second straight week where a direct listing IPO is priced.
Last week, website creation platform Squarespace priced its IPO.
As for ZipRecruiter, it did weather the COVID-19 pandemic better than most, despite still losing revenue.
However, a bright spot was that its net income went into the black, even with the revenue decline.
Employers are scrambling to find qualified workers following the pandemic, and ZipRecruiter is one of the most well-known job-matching platforms out there.
Deeper Dive: Nvidia Corp. Earnings
Computer graphics card maker Nvidia Corp. (Nasdaq: NVDA) highlights this week in earnings.
Nvidia will report its quarterly numbers on Wednesday.
The company started by making graphics cards to enhance gaming computers.
It has started to produce products used in artificial intelligence and autonomous driving applications.
Nvidia Earnings Steadily Climb
Since experiencing a drop in earnings per share in January 2019, Nvidia’s earnings have been on an upward trajectory.
During the height of the COVID-19 pandemic in 2020, the company’s earnings per share only declined once — and that was only by $0.10 per share.
For the quarter ending Jan. 31, 2021, Nvidia posted record earnings of $3.10 per share.
The company has beaten Wall Street earnings expectations in each of the last 10 quarters.
Quarterly Revenue For NVDA Breaks Records
Like its earnings, Nvidia experienced a slight dip at the end of 2018 but has recovered nicely since.
Its quarterly revenue experienced no declines during the COVID-19 pandemic in 2020.
After holding steady from the first quarter to the second quarter, the company’s revenue jumped to $4.7 billion in the final quarter — a 57% increase from Q1 to Q4.
Nvidia started 2021 by breaking its quarterly revenue record after reporting $5 billion in sales.
Wall Street analysts are projecting the company to report earnings of $3.28 per share on revenue of $5.39 billion.
The skinny: Nvidia came out the other side of the COVID-19 pandemic better than it started.
But starting 2021 even better means there are potentially stronger tailwinds for the company in the near future.
This time around, I see Nvidia still beating Wall Street expectations, but not by a wide margin.
Money & Markets Week Ahead: Data Dump
Consumer confidence and inflation will take center stage this week as the Conference Board will report its consumer confidence index for May on Tuesday.
The index measures the level of consumer confidence in economic activity and is used to predict consumer spending.
In April, the index jumped to 121.7 — up from 109 in March. That was its highest level since February 2020.
For context, the index was at 89.3 in January.
It meant consumers felt better about the economic conditions in the U.S.
Consumer Confidence Hits 12-Month High Mark in April
In addition to the increase in confidence in April, it was noted that inflation expectations were steady but elevated.
Analysts expect the index to fall slightly to 120 for May.
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
Nordson Corp. (Nasdaq: NDSN)
Extraction Oil & Gas Inc. (Nasdaq: XOG)
Genetron Holdings Ltd. (Nasdaq: GTH)
Tuesday
Intuit Inc. (Nasdaq: INTU)
AutoZone Inc. (NYSE: AZO)
Urban Outfitters Inc. (Nasdaq: URBN)
Wednesday
Nvidia Corp. (Nasdaq: NVDA)
Snowflake Inc. (NYSE: SNOW)
Workday Inc. (Nasdaq: WDAY)
Digital Turbine Inc. (Nasdaq: APPS)
Thursday
Salesforce.com Inc. (NYSE: CRM)
Costco Wholesale Corp. (Nasdaq: COST)
Dollar General Corp. (NYSE: DG)
Best Buy Co. Inc. (NYSE: BBY)
Dollar Tree Inc. (Nasdaq: DLTR)
Friday
Big Lots Inc. (NYSE: BIG)
Mogu Inc. (NYSE: MOGU)
That’s all for this week.
Until next time…
Safe trading,
Matt Clark
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. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.
