Week of November 9: COVID-19 Corporate Event Impact Report
- As earnings season slows, several firms changed earnings dates, an important development for options traders
- The medical marijuana industry appeared to be a winner after the US election – a pair of pot stocks may shed more light on the state of the industry this week
- There’s no place to hide from volatility – US indices swing wildly while emerging markets deal with their own sources of risk
Earnings Season Update
Q3 earnings season slows down after this week. Wall Street Horizon tracks earnings date trends for thousands of global firms. As the above graph indicates, nearly 2,000 companies publish results this week but that total drops considerably next week. The market will soon turn its focus away from the past and toward the holiday shopping landscape. While election day is behind us, there is still uncertainty in the market. Companies are having to quickly pivot based on the latest development regarding COVID-19 and potential stimulus from the US Congress. Meanwhile, volatility in emerging markets has been high with the Ant Group’s IPO suspension news earlier this month. Traders need the fastest and most accurate corporate event data to navigate this volatile year.
How Have the Latest Trends Impacted Financial Markets?
It’s the same old story – large cap technology firms keep on dominating while small firms that depend on face-to-face interaction have struggled. There is hope on the horizon as a Coronavirus vaccine could be made available early next year. In the meantime, work-from-home for white-collar employees and online learning for children is the modus operandi. In other news, corporate earnings continue to beat expectations. The last two quarters have featured astounding sales and earnings per share beat rates. The difference for the Q3 reporting season versus Q2 is firms that beat on the top and bottom lines this time around are not seeing their share price rise much. Perhaps the easy money has been made.
Earnings Date Revisions
One of the many earnings-related data points Wall Street Horizon tracks is earnings date outliers. Innodata Isogen (INOD) jumped out on this week’s report. On October 29, INOD issued a press release stating it would release Q3 2020 results on November 5. INOD issued a subsequent press release on October 30 stating the Q3 reporting date would be rescheduled to November 12 Before Market. The resulting Z-score, a measure of how far the change is from INOD’s normal reporting date, is 1.76. Traders should be on the lookout for potential news and volatility in the report. Shares of INOD have surged since March, climbing nearly 300% from $0.75 to above $3 just a few weeks ago. From a technical perspective, the stock has seen massive buying interest since August as seen in its volume profile. As traders accumulate shares, nervousness could be on the increase as the re-confirmed earnings date of this Thursday approaches.
Another earnings date re-confirmation that flashed on our radar is that of Simon Property Group (SPG). As the US’s biggest shopping mall operator, 2020 has been devastating for SPG. The stock price has fallen from $150 to $60 as brick and mortar retailers' struggle. Shoppers would rather click their mouse (or swipe on their phone) rather than venture out and risk contracting COVID-19. Traders should recognize the consolidation in the share price of SPG; earnings announcements can often be catalysts for a continuation of a price trend. Couple technical trends with unexpected news announcements, and volatility may be the result. SPG was slated to report earnings on November 2, but the REIT re-confirmed the Q3 report to be released today, November 9. The Z-score was a massive 6.95, so this was a highly unusual change.
Red Flag Alert for UTI
Wall Street Horizon also monitors companies that report earnings outside of the expected timeframe. A red flag firm this week is Universal Technical Institute Inc. (UTI). On August 7, Wall Street Horizon set an unconfirmed Q4 earnings date of November 30 after the bell based on its historical reporting trend. UTI usually reports Q4 results between November 29 and December 2, but without a trend on a specific day of the week. On November 2, UTI issued a press release stating Q4 results would be published on November 18 After Market. This change was very unusual, and it crossed back in front of November’s options expiration – very important for options traders. The extremely anomalous Z-score of -9.36 is evidence of just how unusual the date change is relative to the historical reporting pattern of UTI. Money managers cannot effectively trade options without knowing when an earnings date crosses an options expiration Friday.
Wall Street Horizon Z-score: statistical measurement of how an earnings date (confirmed or revised) compares to the reporting company's 5-year trend for the same quarter. This metric is included in our DateBreaks product, learn more.
Cannabis Company Shareholder Meetings
Two firms with virtual shareholder meetings this week are The Supreme Cannabis Company, Inc. (FIRE) and Aurora Cannabis, Inc. (ACB). Marijuana stocks rose sharply ahead of the US election, but then dropped in its wake. In all, five states voted on various legislative moves to make marijuana more regulated (and legal). All 7 ballot measures passed. This is a key time for cannabis companies, and portfolio managers with exposure to the industry should pay attention to the new state of the business. FIRE’s Annual General Meeting of Shareholders will take place today at 9am ET. Aurora Cannabis will hold its Virtual Annual General Meeting at 12pm ET on Thursday.