Investors await updates from Tesla and Alphabet, UPS underdelivers, Spotify hits the right note and Coca-Cola impresses

“Investors aren’t pulling any punches when it comes to disappointing updates this earnings season and as we brace for the first of those Magnificent Seven stocks to update this evening trading has been pretty subdued,” says Danni Hewson, Head of Financial Analysis at AJ Bell*.

“Often seen as a bellwether for the whole economy, US parcel giant UPS was punished for failing to meet expectations as labour costs soared and margins were put under pressure by shifting customer demand.

“Bosses might not have named Shein and Temu when giving their investor update, but it was pretty clear the Chinese e-commerce giants’ soaring popularity had caught the company off guard and people’s preference for slower, cheaper delivery options had put a strain on operations.

“Even more damaging was the cut to revenue guidance as shoppers remain price sensitive whilst their budgets recover from the recent inflation squeeze and elevated borrowing costs. This seems less of a cardboard box recession and more a recalibration of what customers expect and the prioritisation of value over speed.”

Spotify

“By contrast, Spotify’s ability to persuade more users to pay for premium subscription services has helped the music streamer deliver record profits and investors have been more than happy to dance to their playlist today.

“The numbers might have plenty to do with some major cost cutting measures but it’s the product that really cuts through the noise. Music lovers appreciate the smart service and haven’t been phased by price rises.

“Giving the customer what they want in a way they can’t quite get anywhere else has also driven increased advertising spend as brands jostle for position in prime spots with their target audiences.”

Coca-Cola

“Coca-Cola has played a blinder at a time consumers are carefully considering value and, in some cases, switching to lower cost options. The soft drinks giant has worked on new formulas, packaging and utilising AI in order to drive volume growth by responding to what the market is telling it and keeping prices keen.

“It’s leveraging its brand in tried and tested ways, most notably this year through its long-term relationship with the Olympic Games. That expense has taken a small bite out of margins but by protecting organic growth the company is in a good long-term position.

“Keeping existing customers happy gives them the scope to win over new drinkers at a time some of its rivals such as PepsiCo are having to try and win back customers they’ve lost.”

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