Protests, plus Zoom Video and Dick's Sporting Goods earnings: What to know in markets Tuesday

Heidi Chung

Investors will be hyper focused on the ongoing nationwide George Floyd protests, plus earnings from Zoom Video Communications (ZM) and Dick’s Sporting Goods (DKS) Tuesday.

Large groups of people from cities across the country have been protesting police brutality in the wake of George Floyd’s death in Minneapolis on May 25. The civil unrest and violent nature of some of the protests sparked worry among market participants that perhaps they could lead to volatility in the stock market.

Among one of the biggest concerns regarding the demonstrations, RBC outlined in a note Monday the potential of a second wave of the coronavirus as a result of the massive gatherings in which participants are not abiding by social distancing measures. Additionally, consumer confidence could falter.

“The West and Northeast had seen confidence hit hardest (not surprising, since virus impacts had been more severe) but started to stabilize recently,” the firm said. “We will be keeping a close eye on these regions to see if they resume their downward slide because of the weekend’s events, or if they will continue to be supported by reopening plans.”

On the corporate earnings front, Dick’s Sporting Goods will release first-quarter earnings results before the market open and Zoom Video Communications is scheduled to report results from its first quarter after the closing bell.

While some stores remained in operation, a number of Dick’s Sporting Goods locations had to temporarily close as a result of COVID-19. Dick’s reported fourth-quarter results March 10, before the COVID-19 crisis gained steam in the U.S. At the time of the announcement, CEO Edward Stack explained that the company’s outlook included a degree of caution regarding the rapidly developing coronavirus.

Dick’s Sporting Goods is expected to report an adjusted loss per share of 79 cents on $1.29 billion in revenue, according to analysts polled by Bloomberg.

According to alternative data firm, foot traffic at Dick’s over the recent weeks shows signs of strength. The firm noted that Dick’s had a strong 2019 and was off to a good start in the first two months of this year before COVID-19. noted that Dick’s got hit hard in March when traffic declined 64.4% year-over-year but has since recovered. “Just as the brand entered the pandemic as one of the strongest retailers, so does its recovery look to be one of the fastest-paced. The week of May 4th 2020 saw growth of nearly 15% compared to the week that preceded it and this was surpassed by near 16% growth heading into the week of the 11th,” the firm wrote.

Shares of Dick’s Sporting Goods fell 25% this year, while the broader market was down 4.5% in the same time period.

MOSCOW REGION, RUSSIA - MAY 22, 2020: Russia's President Vladimir Putin holds a meeting via video link from Novo-Ogarevo residence to discuss the current epidemiological situation. Alexei Nikolsky/Russian Presidential Press and Information Office/TASS (Photo by Alexei Nikolsky\TASS via Getty Images)

Often referred to as a “winner” amid the COVID-19 crisis, Zoom will face its moment of truth when it reports earnings Tuesday afternoon. Zoom stock soared a whopping 198% so far in 2020 and added $20 billion in market cap since its last earnings report in March.

Everyone from world leaders and corporate executives to average people have used Zoom in recent months as a way to communicate while abiding by shelter-in-place orders.

The video-conferencing platform is expected to report adjusted earnings of nine cents per share on $203 million in revenue during its first-quarter fiscal 2021. Zoom previously provided fiscal 2021 revenue-growth guidance of 45%, down from 88% in the same period last year. Analysts view Zoom’s guidance as too conservative given the paid user additions during COVID-19.

Zoom shares have been on a tear and hit record highs Monday ahead of its earnings report. The main questions going forward include whether or not the stock may have run too far too fast and is the $57 billion market value justified.

The options market is currently implying about a 14% one-day move in either direction for the stock following its earnings announcement.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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