Fast-spreading COVID-19 begins to hit U.S. businesses

The stock market continues to ignore escalating headlines on the COVID-19 Delta variant front and climb to new highs.

But given the recent change in tone on the part of US companies, investors may be on high alert. Companies that had been optimistic about an economic recovery from the depths of the pandemic are becoming increasingly cautious as the variant spreads.

Here are three household names that recently warned of a financial impact from the COVID-19 Delta variant. Investors may ignore the comment below, but it could prove to be a barrier to earnings in the current quarter – a barrier that is not factored into stock prices.

Disney

While Disney has generally impressed investors with its most recent revenue – most notably reaching 116 million subscribers for its Disney + streaming service – the COVID-19 variant Delta lurks like a potential headwind in the coming quarters.

Visitors leave Sleeping Beauty’s Castle at Disneyland in Anaheim, California, where demand has remained high despite the Delta variant. (Photo by Jae C. Hong, File / AP)

Disney (DIS) says it is seeing an increase in visit cancellations to its parks.

“In terms of the impact of the Delta variant, we’re seeing that the high demand for our parks continues. And the main noise we’re seeing right now is really about group or convention cancellations. large groups arriving relatively infrequently But overall we are seeing very high demand for our parks. In fact, our park reservations are now above our Q3 attendance levels. And as you just saw with the ‘Announcing our results, our Q3 attendance levels were pretty good, so we’re still optimistic about the future of our park business, “Disney CEO Bob Chapek told analysts at a conference. telephone Thursday evening.

Airbnb

Similar to Disney, Airbnb had a strong second quarter as travel resumed after people received their COVID-19 vaccine. The company’s second-quarter sales jumped 299% to $ 1.3 billion from a year ago. Adjusted operating profit reached $ 217 million, a marked improvement from an operating loss of $ 59 million.

Despite the rebound, Airbnb (ABNB) CFO David Stephenson warned that the COVID-19 Delta variant was starting to take its toll.

“So as we come out of the second quarter and into the third quarter, we have a combination of fewer bookings for the fall, just considering the nature of some seasonality and any kind of potential impact on issues. of COVID early in the third quarter. So we’re not seeing a substantial deceleration. “

Airbnb has factored this caution into its outlook for the third quarter – it sees bookings down from the second quarter and from the third quarter of 2019.

South West

As Yahoo Finance’s Myles Udland wrote in the Morning Brief, Southwest surprised investors this week with its own Delta variant warning.

“The company recently experienced a deceleration in close bookings and an increase in close trip cancellations in August 2021, believed to be due to the recent increase in COVID-19 cases associated with the Delta variant. Assuming COVID-19 cases remain elevated in the near term and current revenue trends in August continue into September, the Company’s current outlook for Q3 2021 operating revenue has deteriorated by approximately three to four points compared to its previous outlook three weeks ago, compared to the third quarter of 2019 ” Southwest cautioned in new SEC filing.

Southwest expects third quarter operating revenue to fall 15-20%.

Brian Sozzi is an editor and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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