Toasting to a sweeter future
No more halftime truck-sized sodas... Coca-Cola's sales plunged 28% last quarter and profits plopped 30%. Over half of Coke's sales come from "away-from-home" venues — think: restaurants, sports stadiums, and movie theaters. Since those were corona-closed, expectations for Coke were pretty low. Coke stock actually jumped after the news because:
The anti-Netflix earnings report... Coke's earnings (and their effect on its stock) were the opposite of what we just saw with Netflix. The lockdown hero beat on sales and added 10M new paying subscribers, crushing the 8.2M expected. Buuut...
Earnings are old news — investors care about new news... Earnings reports are mostly lagging indicators on how a company did in the past. Investors are most interested in leading indicators that point to how it'll trend in the future. Profits for the S&P 500 are expected to decline 44% this quarter, the biggest drop since 2008. But the major indexes are hitting all-time highs because investors believe the worst is over.