Earnings season is just about at its peak, and stock market investors have had to balance a number of factors in making their investment decisions. Between macroeconomic factors, the likelihood of yet another Federal Reserve interest rate hike this week, and a host of uncertainties on the geopolitical front, it's no wonder that many market participants are scrambling to figure out what to do next.
Many economists look to consumers to get a sense of what the future will bring, and a couple of key companies in the consumer sector will report their latest financial results this week. Below, you'll learn more about what investors are expecting from coffee giant Starbucks (SBUX -1.77%) and travel accommodations platform disruptor Airbnb (ABNB -1.03%) this week. What the two companies say could well have an impact on the entire stock market.
Starbucks looks for a pick-me-up
Starbucks has been struggling throughout the year. Although the coffeehouse chain has seen its stock price recover more than 20% from its worst levels back in June, it's still down roughly 20% since the beginning of 2022.
Interestingly, Starbucks' home market has generally held up well despite macroeconomic pressures. In the company's fiscal third-quarter financial report for the period ending July 3, the coffee giant reported overall sales gains of 9%, with comparable sales in the U.S. seeing a 9% boost. Indeed, stores outside North America saw the greatest weakness, with comps falling 18% due largely to extreme weakness in the Chinese market.
However, Starbucks has faced challenges on its bottom line, and investors aren't much more confident heading into the fiscal fourth-quarter report on Thursday. Most of those following Starbucks expect earnings to fall 28% year over year to $0.72 per share, with revenue gains slowing to just 2%.
Shareholders will need to watch a number of things at Starbucks. The impact of labor unionization will be of concern to investors, as will the coffee giant's exposure to the Chinese economy and the strong U.S. dollar. Although the long-term trajectory for Starbucks' growth appears to be intact right now, there could be further short-term headwinds ahead that could curtail the company's progress into 2023.
Can Airbnb keep cashing in on the travel itch?
Meanwhile, Airbnb is slated to report its latest quarterly results on Wednesday afternoon. The alternative accommodations specialist has seen its financial performance recover sharply as travelers return to the road, but the macroeconomic headwinds that have some calling for a recession are making some shareholders nervous about just how resilient the reopening trend will be.
Airbnb's second-quarter results were spectacular, with the company reporting 103 million room-nights and experiences booked on its platform during the three-month period. Although sales gains lagged what optimistic shareholders had wanted to see, earnings came in far better than some had expected. New features and favorable trends continued to push Airbnb's business forward.
For the most part, investors seem just as optimistic about the prospects for Airbnb's business in the third quarter. Earnings are expected to climb nearly 20% year over year, with sales trends reflecting the high season for travel in the summer months.
Nevertheless, with the stock price down by more than a third since the beginning of the year, Airbnb shareholders don't seem convinced that the company is entirely invulnerable to a potential cyclical downturn in the consumer economy. Moreover, with a fairly pricey valuation, further action from the Federal Reserve to hike interest rates could once again cause Airbnb's shares to feel pressure.
