Look ahead to FTSE 350, other companies reporting & economic events from 17 – 21 October 2022

• Netflix should offer an update on whether its ad supported tiers can carry the business through a tougher environment.
• We’ll see if ASOS will follow in the footsteps of some of its retail peers with disappointing results
• Tesla’s performance in China will be in the spotlight
• Ongoing growth expected from Relx
• London Stock Exchange Group looks to deliver steady results

Netflix, Q3 Results, Tuesday 18 October
Laura Hoy, ESG & Equity Analyst:

“It’s been a rough year for streaming giant Netflix, but there could be some good news when the group reports their third quarter results. All eyes will be on the group’s plans to launch an ad-supported tier and squeeze more revenue dollars out of its subscriber base. Some estimate a successful rollout of ad-supported content could bring in an additional $600m in 2023 with that figure just about quadrupling by 2026.  That will take near-perfect execution, though and investors will want to see that plans are firmly on track.

Subscriber numbers will, as always, be another area of focus. The group stumbled a bit at the start of the year but managed to beat expectations in the second quarter. It was a low bar to clear though, management had forecast a 2m drop from the previous quarter. This time around the group’s guided for a 1m increase. Given the ongoing market volatility and worries that belt tightening will see memberships slashed the household budgets, it will be an imperative metric to hit.”

ASOS, Full Year Results, Wednesday 19 October
Laura Hoy, ESG & Equity Analyst:

“The cost-of-living crisis took a bite out of retail heavy hitters boohoo and Next, leaving many to wonder whether ASOS is next to deliver disappointing news. The group managed to maintain its full year profit guidance in the face of rising costs at the half year, but the question now is whether profit before tax of £20m, the bottom end of guidance, is still possible.

August sales were tepid and the Autumn/Winter season was off to a slow start.  It’s difficult to imagine that trend reversed given the macro environment has only deteriorated since then. That doesn’t bode well for the group given return rates were also on the rise. It would be good to get an update on how the group’s dealing with the excess stock that comes along with elevated returns—to much discounting could damage brand power and set the tone for margin erosion in the longer-term.”

Tesla, Q3 Results, Wednesday 19 October
Sophie Lund-Yates, Equity Analyst:

“One of the concerns for the wider market is how Chinese lockdowns are affecting companies. It seems Tesla is shrugging the worst of this off. We already know that Tesla’s sales in China have hit a new monthly high, with 83,000 vehicles sold in September. That’s an 8% increase on the previous month and suggests supply chain problems are easing. This is all excellent progress, but there will be some things to keep in mind.

Signs of a growth slowdown in China will be watched for. The region is home to some worthy competition – Tesla’s September sales were less than half of more than 201,000 vehicles sold by rival BYD. Any commentary around this will be taken seriously by the market.

Finally, it will be well worth looking at Tesla’s pricing. The group’s raising prices to offset the effect of inflation in the supply and production chains. But there’s a limit to how far these selling prices can go before customers start to delay their Tesla purchase. Tesla has a formidable fan-base, but they’re catering to a demographic that’s about to feel the burden of the worsening cost-of-living crisis.  We worry not everyone will be able, or willing, to keep paying the price tag Teslas demand in the current climate.”

Relx, Q3 Trading Statement, Thursday 20 October
Steve Clayton, Fund Manager, HL Select:

“We expect Relx to continue to see a recovery in its events business and ongoing growth across legal, academic publishing and business information. Many will be hoping for guidance on how the group sees a recent initiative from the White House to drive Federally-funded research papers onto free-to-access platforms.

Historically, Relx have said the route-to-reader is immaterial; they claim to be equally well able to monetise research published in their traditional paid-for academic journals. When Relx last commented, they said they were set to deliver above average growth in the current year. Since then, the economic clouds have darkened, but with the exhibitions division benefiting from a post-pandemic tailwind there seems a good chance the group will remain on-track.”

London Stock Exchange Group, Q3 Trading Statement, Friday 21 October
Steve Clayton, Fund Manager, HL Select:

“Traditional equity trading income is unlikely to be too far away from the year-ago level for The London Stock Exchange Group, but the slow-down in corporate deal-making could be impacting its capital markets revenues. The exposure to the US market through the Russell Indices business will be a drag, given Wall Street weakness, but the drop in sterling could well save the day for the division. With the group able to access significant degrees of self-help as it unlocks the benefits from its earlier acquisition of Refinitiv, the LSEG should be one of the more reliable reporters in the current results season.”