Netflix Inc, easyJet, miners and supermarkets make for a super-busy Tuesday

Supermarkets, airlines, miners and provide many strands of interest in Tuesday’s business diary as the second-quarter reporting season gets into second gear.

Unlike the more exuberant first quarter earnings season, “investor sentiment is rather subdued” now, JPMorgan strategists observed this morning, with many stocks having derated in recent weeks.

“Fundamentally, Q2 results should be even stronger than what was seen in Q1,” they added, with recent macroeconomic surveys showing improvement on the previous quarter, though the tech sector “could lose momentum from here”.

Eyes on

First up from FAANG group of popular tech stocks is Netflix Inc (), which will be getting high viewing figures from investors and analysts when it reports second-quarter earnings after the market closes tomorrow.

Subscriber growth hit a snag in the first quarter of the year and these numbers are expected to show a further unravelling of the video streaming giant’s market share, but could confirm more details about what it plans to do to pep its business up.

Netflix added just under 4mln net new paid subscriptions in the first quarter, much lower than expectations, and described as “just a little wobbly right now” by founder Reed Hastings.

Guidance for the second quarter is for a big slowdown to 1mln additions – which would be its lowest ever quarter.

“Not only are the likes of Disney and Amazon luring in new viewers with their latest hit shows and back catalogues, but the long-awaited re-opening of cinemas could also dent sign-ups,” said analyst Susannah Streeter at Hargreaves Lansdown.

She added: “The figures may surprise on the upside, but with other entertainment avenues opening up once more, it’s going to be increasingly tough to keep all eyes on the screen.”

Video games looks likely to be a new service introduced to attract customers, as indicated by the hiring of a former EA and Facebook man as new game development chief earlier this month, while there have been reports that the company is looking to attract more older subscribers by commissioning more crime and documentary content.

easyJet arrival

An earlier arrival will be budget airline easyJet PLC (), which will report a trading update early on Tuesday.

The carrier has been flying high since November amid expectations of an easing of restrictions, however, the impending return of several Spanish islands and France to the amber list seems to have dented the outlook somewhat, with the shares down around a quarter since the start of June.

However, easyJet will be hoping other countries that have since been added to the green list will help offset the shortfall, with any details on summer bookings likely to draw scrutiny.

Investors will also be expecting a bit of an improvement in revenues, which last quarter were down 91% year-on-year.

Given the yo-yoing state of UK travel restrictions, the near-term outlook for the company and the sector remains anyone’s guess.

Supermarket forces in flux 

Mid-morning, there will be fresh supermarket data from Kantar to chew over, with investors looking out for signs of a continued slowing in online grocery shopping as the country opens back up from coronavirus restrictions.

Also – though there is not likely to be any sign yet – the effects of the ‘pingdemic’ on supermarkets is also in many investors thoughts, with having said it has had to shut some stores as staff have been told to self-isolate by the Test & Trace app.

Focusing purely on the grocery sales data, the report last month showed e-commerce’s share of the market remained flat at 13.4% for the four weeks to 13 June, with take-home grocery sales down 1.6% compared to last year but still £3.3bn higher than in 2019.

Another factor to watch is the effect of the rapid growth of fast-track delivery services for smaller top-up shops, with Tesco’s () Whoosh and Ocado Group’s () Zoom set up to defend territory against the likes of Getir, Weezy, Jiffy, Gorillas, Grocemania, Beelivery and Zapp popping up in London and many other cities.

Mining reports

With Rio Tinto having updated the market on production last week, it is the turn of fellow diggers (), BHP PLC (LON:BLT) and ().

The potential “read across” trends from Rio were rising costs, largely caused by increased labour costs and a hike in the price of diesel, and the strong recovery in the first half of the global economy, especially in China.

Based on Rio’s softer production update and indications that iron ore and copper production for full year are now expected to be at the lower end of the guidance range, Citigroup said “a similar trend could perhaps be seen for some of the other miners during the ongoing reporting season”.

Looking back at the past eight years, Citi analysts observed that mining company production guidance have been 3% too optimistic, with 2019/20 being a worse than usual year at around 5-6%.

Significant announcements on Tuesday July 20:

Trading announcements: easyJet PLC (), (), (), PLC (), (), Integrafin Holdings PLC ()

Finals: Group PLC (), (), PLC (), ()

Interims: (), Group PLC (), TClarke PLC ()