4 Stocks With a Lot to Prove in October
Image source: Netflix.
It's a new month, but October won't be just any month for a few companies. Netflix (NASDAQ: NFLX),Apple (NASDAQ: AAPL),Chipotle Mexican Grill(NYSE: CMG), and GoPro(NASDAQ: GPRO) have a lot riding on events that will play out in the coming weeks.
Will the looming catalysts be positive or blow up in investors' faces? Some will offer tricks. Some will offer treats.Let's size up why all four of those stocks could be in for a wild October.
Keep your subs above water
Netflix reports quarterly results on Oct. 17, and it's going to be an important checkup for the leading premium streaming service. Netflix fell short of subscriber targets during the second quarter, a rare miss for a company that has historically offered conservative guidance that it can easily beat. It also served up uninspiring guidance for the third quarter, and now there are fears that it didn't set the bar low enough.
Big-data analytics specialist M Science is forecasting that Netflix gained as many domestic subscribers as it lost during the quarter, well short of the 300,000 net additions that Netflix itself was projecting earlier this summer. This was already going to be a challenging quarter. Longtime subscribers who were grandfathered into the original rate of $7.99 a month for the flagship streaming service when it was bumped up to $8.99 more than two years ago and $9.99 last year now have to pay the current rate. However, that change should have already been baked into Netflix's original outlook.
Most of Netflix's growth over the past two years has come from its international gains, but there will be a jolt to the stock if stateside subscribers are peaking.
Smartphones don't know everything
September treated iFans to the updated iPhone 7 and Apple Watch Series 2, but Apple was mysteriously silent in pushing out sales data for the iPhone's debut weekend. It warned that it would no longer be doing this -- and a supply shortage on the iPhone Plus end didn't help -- but this does make Apple's Oct. 27 earnings report more interesting than usual.We will finally get sales data on the iPhone and the new Apple Watch, at least through the end of September.
Analysts have been warming up to Apple this summer. The iPhone 7 launch appears to be going better than expected, as many were writing it off until we get to next year's 10th anniversary edition. We'll get the final word on initial demand by the end of this new month.
Rolling with the changes
Chipotle is another battleground stock that will be posting fresh financials this month. The burrito roller's chance to shine will be Oct. 25, but to be fair, no one is expecting it to shine. Stores continued to post double-digit declines in comps through July, and all indications suggest that this will be the chain's fourth straight quarter of brutal negative same-restaurant sales.
This is still the most important quarter since a couple of foodborne-illness outbreaks sent patrons scurrying from the once darling brand late last year. This was the quarter of Chiptopia, the three-month promotion that was supposed to make its most loyal customers come back more often. Chipotle's guidance will also be critical, since the year-over-year comparisons should start to get kinder once we get to November, when the negative press began to sting sales last year.
Cameras take flight
Netflix, Apple, and Chipotle have big quarterly reports to dole out this month. GoPro does, too -- it should report near the end of the month -- but the real stock movers will be tomorrow's debut of Hero5 and the Oct. 23 rollout of GoPro's Karma drone.
Like Chipotle, GoPro's coming off three brutal quarters of sharp sales declines. The path is clearer for a turnaround at GoPro, where analysts see a sharp rebound in sales by the holiday quarter. The new products will go a long way toward getting GoPro there.
Netflix, Apple, Chipotle, and GoPro will be watched closely this month. Expect all four stocks to be volatile as they either step up to the challenge or fall short.
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Rick Munarriz owns shares of Apple and Netflix. The Motley Fool owns shares of and recommends Apple, Chipotle Mexican Grill, GoPro, and Netflix. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.