The Week Ahead on Wall Street
Today, consumer credit will be released for October. In September the figure surpassed $16.2 billion, after declining by over $6.9 billion in August. Consumer credit generally refers to personal debt and describes the goods and services people purchase every day with products like credit cards.
Tomorrow, Productivity and Unit Labor Cost Reports for the third quarter are due. Unit Labor Cost describes the pay employees receive in exchange for one unit of work. That pay can include both wages and other benefits. When worker productivity increases, labor cost tends to decrease. Preliminary estimates showed unit labor costs plummeting 8.9% in the third quarter after growth during Q2.
October job openings and wholesale inventories will be released on Wednesday. In September, the number of job openings was largely unchanged from the month before. These metrics are part of the Employment Situation Report, which helps investors get a better sense of the labor market and overall job growth.
On Thursday, initial jobless claims, the November Consumer price index, November Core CPI, and November Federal budget will be released. Last week, jobless claims fell to a pandemic low of 712,000 after rising the week before.
On Friday, the November producer price index and December Consumer Sentiment Index will be released. The sentiment index measures the health of the economy as consumers understand it. Last month, consumer sentiment fell in response to rising coronavirus cases. Economists fear that if a stimulus package is not forthcoming, the economy may take another hit.
Earnings to Keep an Eye On
Today, Stitch Fix (SFIX) will report its earnings. Last quarter the apparel company saw a boost in sales after the pandemic slowed down supply chains and advertising spending earlier in the year. Despite a lack of growth in the apparel industry, Stitch Fix was able to gain market share with more leisurewear options and its direct to consumer model. Investors hope to hear how the company will adapt its marketing and apparel offerings to reflect shoppers’ appetite heading into the new year.
Tomorrow, Chewy (CHWY) will report its latest results. Pet adoptions surged during the pandemic. Between February and July, Chewy added more customers than in the whole of the previous financial year. As a result the company's stock has climbed 150% this year. Investors will be curious to see if this trend continues.
Campbell’s Soup (CPB) will report earnings on Wednesday. Wall Street expects the juice, cookies, and soup maker to post year-over-year growth in earnings thanks to higher sales. Revenue from this most recent quarter is expected to hit $2.32 billion—a 6.3% increase from this time last year—as more people cooked and ate at home as a result of the pandemic.
On Thursday, Costco Wholesale (COST) will report its latest results. Investors expect the warehouse club to announce earnings of $2 per share and $42.43 billion in revenue. That represents revenue growth of 14.6% from this time last year. Thanks to robust demand as a result of quarantines and lockdowns, Costco's stock has advanced nearly 30% so far this year.
Also Thursday, Lululemon Athletica (LULU) will report. Analysts expect earnings to land around $0.85 per share, or -11.5% compared to last year. Revenue, however, is expected to be up from this time last year, at $1.01 billion. As consumers stayed at home, the athleisure maker saw more demand. Analysts will be curious to hear how Black Friday and the holiday shopping season is shaping up for the company.
The Week Ahead at SoFi
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Kid-Focused YouTube Channels Gain Ground
Remote Workers Could Face Unexpected Tax Bills
When the coronavirus pandemic hit large cities in the spring, many newly-remote workers fled to less populous areas, often crossing state lines. The pandemic has lasted for longer than many expected it would, and some people have now been working from family members’ homes or Airbnbs in new states for nearly a year.
Now, as the end of the year approaches, those workers who have created temporary work-from-home setups outside the states where they are employed could face unexpected tax challenges. According to an October poll, more than 70% of Americans are unaware that working remotely from another state can impact their state taxes, so many could face surprises when it comes time to file.
Disputes Between States Over Remote Work Tax Protocol
Taxpayers will not be the only ones frustrated by complicated state tax laws when it comes time to file. States themselves are also warring about who should pay where. States like Massachusetts, Maine, Georgia, and Pennsylvania plan to charge income tax for workers who have relocated to other states during the pandemic. Fourteen other states and the District of Columbia have stated they will not tax people who have relocated to their states during the period of remote work.
Officials in states like New Hampshire, where earned income is not taxed, are frustrated that new residents who have been working remotely for companies based in Massachusetts will be forced to pay income taxes to Massachusetts during the pandemic. In fact, New Hampshire has asked the US Supreme Court to block Massachusetts’ cross-border tax collection proposal.
Preparing for Tax Season Now
Tax advisors say there are a few easy steps remote workers can take to prepare for tax season. It is a good idea for people to look back and think about where they have been working during the pandemic, and for how long. The amount of tax remote workers will pay will depend on how many days they have spent in each state. Some workers will pay income taxes in the state where they are employed, or in the state where they have relocated for the duration of the pandemic, or both.
A number of states have also implemented pandemic-specific rules about what qualifies someone as a taxable resident. These rules are important to research when preparing for when it comes time to file taxes. Consulting a tax professional is also a helpful way to get ready for what could be a complicated tax season.
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Pandemic Leads to State Tax Complications for Remote Workers
Ryan’s World’s Joins Roblox
Toy aisles have long been packed with merchandise from popular children’s television shows. Now, much of that source material comes from another platform: YouTube (GOOGL). As kid-focused YouTube channels gain in popularity, they have also become more marketable. “I firmly believe that in a few years these brands will rival that of Sesame Street,” said Brendan Gahan, Chief Social Officer at the ad agency Mekanism Inc. “They’ve got the mass appeal, which is likely bigger than Sesame Street in most cases now—they just haven’t monetized it through as many avenues. I think you’ll see that change quickly.”
Take, for example, Ryan’s World, the popular YouTube channel which is known for unboxing videos. Since 2018, the channel has helped market toys, clothes, and toothbrushes sold at Target (TGT) and Walmart (WMT). The channel also led to the first Macy’s (M) Thanksgiving Day Parade balloon featuring a YouTube star. Over the weekend, Ryan’s World launched its own corner of the videogame universe on Roblox.
How the Roblox Deals Break Down
Before the end of 2020, the adults behind Ryan’s World expect the franchise to earn $250 million in retail sales this year alone. That will bring the franchise’s total earnings since retail sales launched in 2018 to $500 million.
That retail empire will be promoted on the new Roblox game. Players will be able to try out a race car in the Roblox universe and then purchase that same Ryan’s World-branded race car at an FAO Schwarz store. The channel will not just use Roblox for product promotion. Ryan’s World will take in revenue from the sale of “gems” on the platform. After the gaming platform takes its 30% cut of digital sales, the top creators on the platform can make as much as $1 million per year from these in-game purchases.
A Blueprint for Other Content Creators
Pocket.watch, the entertainment company that manages retail and other business for Ryan’s World, considers the YouTube channel’s success a blueprint for other kid-focused content creators. Instead of launching a ride at a Disney (DIS) theme park, YouTubers can create digital versions of those theme parks and meet their fans where they are already hanging out.
Pocket.watch represents 12 content creators, including Ryan’s World. According to executives, retail sales make up 54% of its revenue. As YouTube content for children continues to grow, analysts expect more entertainment companies and toy manufacturers to leverage that following for games and retail products.