The Week Ahead: UK GDP, Aviva, Cineworld, Coinbase, Disney Results

Read our pick of the top stories to look out for this week (9-13 August), and view our key company earnings schedule.

Michael looks back at last week's record highs for European and US markets, and ahead to the latest UK Q2 GDP and US CPI data, plus the latest results from AMC Entertainment Q2 results/h2

MON 9: Cinemas have borne the brunt of the lockdowns, not that you’d know it from the performance of AMC's share price this year. The shares finished 2020 at a lowly $1.35, as speculation abounded that it was on the verge of bankruptcy. That outcome was only averted at the end of January with a $917m cash infusion, with half coming from investors who purchased shares in a stock offering. At the end of its last fiscal year, AMC was burning through $125m a month to keep 438 of its US real estate open, with little or no customers and not many films to show. In 2020 the company lost $4.6bn, and while some US states have allowed cinemas to open, they have all been on condition of various restrictions.

AMC has enjoyed some good fortune on the way: without the Reddit meme stock fallout which saw it get swept higher along with GameStop (NYSE:GME), it probably wouldn’t have been able to raise any of the additional capital, as shares soared to record highs of $72, valuing the business at over $30bn, despite having little or no revenue. The rise in US vaccination rates has seen more people return to the cinema, however AMC’s biggest problem is a lack of big box-office films to get customers through the door.

As AMC’s share price hit a new record high in June, management seized the opportunity to raise more money by selling another 11.5m shares to pay down debts, as well as build its balance sheet. The shares dropped back modestly, but not by enough to suggest the air was coming out of this box-office turnaround story. In May, just a month before the June share sale, AMC posted a quarterly loss of $567m on revenue of $148.3m. With a lot of the new shareholders among the so-called Reddit traders, the shares seem on a much firmer base despite the awful state of the finances. AMC still expects to be cashflow negative for at least the next two quarters, and will be hoping the release of summer blockbusters like Black Widow will have helped boost its numbers in Q2.

AMC’s biggest problem will be persuading cinema-goers to come back, having got used to streaming on demand, as well as the luxury of the pause button on a 55-inch TV. The shares did come under pressure after Marvel’s Black Widow release at US cinemas, when the data showed that $60m of streaming transactions took place for the film. If this was replicated with other simultaneous releases, and facemasks remain a requirement, it suggests the loss of 5-6m in potential footfall. Losses are expected to come in at $1 a share, or $510m.

h2 Airbnb Q2 results/h2

THU 12: Airbnb shares have been on a downward track since they posted record highs in March, as some of the early enthusiasm for the IPO wears off. It’s not hard to see why when you look at its lofty valuation, and even though we’re down by over 30% from those peaks, it’s still worth over $80bn, a figure that puts it well above the likes of Marriott and IHG. In Q1, sales beat expectations with gross bookings surging to $10.3bn, while revenue came in at $887m. Losses widened to $1.95 a share, or $1.2bn, largely due to a debt repayment, while Q2 revenue is expected to be at a similar level to the same quarter as 2019, which is a little disappointing. Over 50% of Airbnb’s revenue came from the US, which suggests there is potential for plenty of upside in a global sense, however given virus flare-ups globally, the rest of the world is likely to take a bit longer to pick up the slack, which suggests that while the US market is likely to show a strong performance, the rest of the world might be another matter. Losses are expected to come in at -$0.36 a share.

h2 Disney Q3 results/h2

When Disney reported its Q2 update in May, there was a lot of anticipation given that US theme parks were starting to reopen, and film and TV production were also ramping up. In March, the shares hit a record high, and while they have since drifted back the outperformance has been remarkable given how much of its core business has been shut down these past 12 months. Losses in the parks were still high, coming in at $406m, while revenue came in at $3.17bn. Total revenue over the quarter came in at $15.61bn, which was below expectations, while the growth of Disney+ subscribers appears to be starting to plateau, as subscribers rose to 103.6m, well short of the 110m target. This shouldn’t be a surprise given the similar slowdown seen by Netflix (NASDAQ:NFLX) over the summer months, however there is also an element that a lack of new programming could be a factor. What is more worrying is that streaming revenue declined per head as the company rolled out its India service, where prices are lower.

Disney were more optimistic about this quarter, but still pointed to headwinds on the parks, with an estimate of another $1.2bn impact on revenue due to lower capacity constraints. Profit in Q2 were still better than expected, coming in at $901m or $0.79 a share, while profit for Q3 is expected to decline to $0.56 a share. There is little doubt that revenue from Disney+ has helped through the pandemic, and while the service is still operating at a loss, we are now starting to see a host of new content which may attract new user, including the addition of Loki and a new animated Star Wars series, The Bad Batch For UK, Canada and Australia viewers, the addition of Star, which includes the Fox catalogues of X-Men and Avatar, as well as National Geographic, is also a plus, along with the fact that users don’t have to pay extra for 4K content, unlike with Netflix.

h2 Index dividend schedule/h2

Dividend payments from an index's constituent shares can affect your trading account. View this week's index dividend schedule

h2 Selected company results/h2

Company announcements are subject to change. All the events listed above were correct at the time of writing.

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Written By: CMC Markets