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As the World Trade War intensifies, US companies navigate the revenue season are cautious to avoid forward-looking statements.
We’ve seen Delta bring out guidance for 2025. Executives say that customs policies will challenge “uncertainty” to forecast the future. Carmax has also withdrawn its long-term growth timeline.
“Why put targets there that are really speculative, without knowing exactly where this environment is going?” Carmax CEO and President Bill Nash said he said in a company’s revenue call earlier this month.
United Airlines executives took a different approach and chose to call revenues to provide investors with very different profit forecasts. At the high end, if the terms remain “stable” – adjusted earnings per share could be $13.50. At the low end, EPS could immerse in $7 if the US economy falls into a recession.
President Trump’s “liberation day” tariff policies may not be directly reflected in first quarter revenue. But we know that businesses and consumers have changed their behavior in the past few months in anticipation of global trade changes.
US retail sales rose 1.4% in March, with expensive items like cars leading the way. Consumers were trying to lock the prices before the tariffs came into effect. The US ISM manufacturing inventory index also rose last month, with signalling companies possibly stockpiling products and consumables before import prices rose.
The first of what is called Magnificent 7 (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla) will report revenue this week. Tesla will start things tomorrow, with the alphabet call scheduled for Thursday.
Tesla will be particularly interesting to watch as it has a connection with CEO Elon Musk and the White House, and tariffs are expected to affect electric vehicle companies.
Despite Tesla’s increasing domestic supply chains in recent years and assembles cars in the US, the company is heavily dependent on foreign imports (particularly from China). In Tesla’s fourth quarter revenue call, CFO Vaibhav Taneja said the tariffs are expected to affect the company’s “business and profitability.”
In the case of the alphabet, investors are waiting to hear what executives think about the global macroeconomic situation. Business spending is expected to decrease with tariffs, and the global advertising market may be small. Retail ads represent almost a quarter of Google’s advertising revenue.
