April 2023 is here, and it’s shaping up to be a big month for stocks. We’ve already seen a rally in oil stocks caused by an OPEC (Organization of Petroleum Exporting Countries) supply cut, and we have a major string of earnings releases coming up. In the middle of the month, U.S. banks will start releasing earnings, followed by U.S. tech companies near the end. It will be a big month for the markets, whether the news is good or bad.
In this article, I will explore two stocks that could move a lot this month based on the events that are scheduled to occur.
Shopify
Shopify (TSX:SHOP) is a Canadian technology stock that has risen 33% so far this year. It’s up because of increasingly optimistic sentiment toward tech stocks as a whole. Shopify’s last earnings release was a disappointment, featuring 26% revenue growth and negative profit. If 26% growth sounds good to you, remember that this company grew its sales at 86% in 2020. So, 26% growth is actually a big slowdown.
The reason why Shopify could have a big month in April is because similar U.S. tech companies like Amazon will be reporting earnings this month. The numbers these companies report could have some influence on Shopify. Although SHOP itself doesn’t report earnings until May, tech stocks (like all types of stocks) correlate closely with stocks similar to themselves.
If U.S. tech earnings are good, then Shopify will likely rise; if they’re bad, then Shopify will likely fall. What counts as “good” is up for debate. Many U.S. tech companies are likely to reveal that their earnings declined on a year-over-year basis last quarter. The U.S. dollar is strong, which makes tech companies’ non-U.S. earnings decrease in value. Also, we’re in a cyclical downturn in the tech sector. These factors have been weighing on U.S. tech earnings lately.
However, there are situations where a company’s earnings decline, and its stock rallies anyway. This can occur when the expected decline is worse than the actual one. It occurred last quarter with Meta Platforms stock. Meta’s earnings fell but less than investors expected them to. The stock rallied.
For this reason, it’s impossible to predict whether U.S. tech earnings will be good or bad, but I can confidently state that they will have a non-zero impact on Shopify stock. The general tendency of stocks to correlate with similar stocks is pretty strong, plus some of the companies about to report their earnings (e.g., Amazon) could tell us some things about Shopify’s own likely performance.
Rogers
Rogers Communications (TSX:RCI.B) is another Canadian stock that could move due to earnings — in this case, not some other company’s earnings, but its own. Rogers is expected to report earnings on April 19, and the release is likely to move the stock’s price.
First, it’s the company’s first release since it completed its acquisition of Shaw, a $26 billion deal that is sure to have an impact on profit. Second, Rogers reported 6% growth in revenue and 25% growth in profit last quarter. That’s much better than what other telecom companies delivered in the same period. So, investors will be hoping to see that earnings momentum continue. If it does, it could be a catalyst that takes the stock higher.
