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Netflix, American Airlines, Morgan Stanley: Earnings to watch this week

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Yahoo Finance's Emily McCormick previews upcoming earnings reports and economic data to watch for this week.

Video transcript

AKIKO FUJITA: Well, earnings season in full swing, with Goldman Sachs the latest to report today. We've seen those shares down significantly-- more than 7% now on the back of rising expenses being a big concern there. Many more companies up ahead this week on tap, with Netflix the big one. Let's bring in Yahoo Finance's Emily McCormick with a preview of the week ahead. Emily.

EMILY MCCORMICK: Well, Akiko, as you mentioned, earnings are definitely the big focus for this week. And this week, we'll still have a relatively light earnings calendar in terms of the number of companies posting results. But the names that are reporting are big ones. Now, big bank earnings have so far dominated the schedule, and that's set to continue tomorrow with Bank of America and Morgan Stanley reporting results along with other names including Procter & Gamble, Intel, and United Airlines.

Now, on Thursday, we'll also be getting results out from American Airlines and Netflix. But in terms of how earnings have been tracking so far, they haven't been quite as strong as many analysts expected heading into this season, especially considering how much growth we saw in earnings last year. Now, according to data from Bank of America, so far just half of companies that have reported results have beaten on both sales and earnings per share compared to consensus estimates.

And that is so far well below the post-COVID average of 67% after the first week of earnings. And as we've heard from banks, including JP Morgan and now Goldman Sachs earlier today, labor costs and higher compensation expenses have been a big factor impacting earnings. But I do want to dive a little bit deeper into what we'll be hearing potentially from Netflix with that earnings report on Thursday.

And as usual, Netflix is kicking off big tech earnings and setting the tone on what we should be expecting from these growth names. Now, Wall Street is expecting the fourth quarter to have been the strongest for subscriber growth for Netflix in 2021, considering its solid content slate at the end of the year. And consensus analysts are looking for subscribers to grow by 8.3 million or double the subscriber net additions seen in the third quarter.

Revenue's also expected to rise by 16% over last year to come in at about $7.7 billion. Then, finally, do also want to highlight the economic calendar for this week. Much of this is going to be centered on housing data, with housing starts and building permits out tomorrow as well as Thursday with those existing home sales as well. Last week, we did see a jump of the average rate on a 30-year fixed rate mortgage to its highest level since March 2020.

So a big focus is going to be on whether these rising rates, especially as Treasury yields continue to march higher, whether this will begin to impact housing demand. But again, overall, another busy week here for both earnings and economic data. Akiko, Brad.

AKIKO FUJITA: Emily McCormick, thanks so much for breaking that down for us.

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