Seasonal Trading Patterns: Impact on Stock Performance

Historical Stock Performance Across Seasons

Historical stock performance shows seasonal trends, with Apple maintaining steady revenue despite fewer sales weeks and foreign exchange headwinds in the first half. Amazon faces Q3 profitability challenges due to Prime Day. Google experienced a significant stock value drop in February. JPMorgan notes cash buffer normalization, indicating economic conditions' impact on stock performance.

"Computing opportunity in enterprise. Taking a quick step back, when we look at our performance during the first-half of our fiscal year, total company revenue was roughly flat to the prior year in spite of having one less week of sales during the period and some foreign exchange headwinds." --- (AAPL, earning call, 2024/Q2)

"We rolled that into second quarter and we expect to continue performance in that as we go through the trough and meet the higher second half of the year." --- (BAC, earning call, 2024/Q1)

"saved billions of dollars on deals across every product category. From a profitability perspective, we've historically seen a headwind to operating margin in Q3, driven by Prime Day deals, as well as the marketing spend surrounding the event." --- (AMZN, earning call, 2024/Q2)

"And again in February, the stock lost 96,000,000,000 in market value after Gemini's release when it generated historically inaccurate images, including black Nazis." --- (GOOG, event transcript, 2024/06/07)

"Cash buffers have largely normalized, while balances are still above historical averages. Lower income segments saw larger gains off a lower base during the pandemic, and we expect them to fully normalize this year." --- (JPM, Investor Day, 2024/05/20)

Sector-Specific Impacts of Seasonal Trading

Seasonal trading patterns significantly impact sector-specific stock performance. Pfizer's Comirnaty sales peak in Q4, Disney's India sports offerings soften Q3 results, Netflix's membership growth varies with consumer behavior, Johnson & Johnson's orthopedics business faces seasonal selling day changes, and Nike adjusts supply to maintain market health in the year's second half.

"In addition, even though Comirnaty revenues continue to perform consistent with our plan, it is important to remember that we expect approximately 90% of our sales to occur in the second half of the year, mostly in Q4 given the seasonal nature of this product." --- (PFE, earning call, 2024/Q1)

"We've said all along, our path to profitability will not be linear. And while we are anticipating a softer third quarter, due in large part to the seasonality of our India sports offerings, we fully expect streaming to be a growth driver for the Company in the future and we have prioritized the steps necessary to achieve this." --- (DIS, earning call, 2024/Q2)

"Our membership growth exhibits a seasonal pattern that reflects variations when consumers buy internet-connected screens and when they tend to increase their viewing." --- (NFLX, sec filing, 2024/Q2)

"There have been a couple of one-timers both in terms of selling days, as we mentioned earlier, about 80 bps of selling days and then a revenue recognition change within our orthopedics business, which impacted that business by about 300 basis points." --- (JNJ, earning call, 2024/Q1)

"But the actions that we're taking are also causing us to look at the broader marketplace in the second half of the year and ensure that we're reducing supply there as well to maintain a healthy marketplace and also to ensure that we've got capacity in the market to bring newness in." --- (NKE, earning call, 2024/Q4)

Impact of Major Holidays on Stocks

Major holidays significantly impact stock performance, as seen with Target's strategy to boost sales during non-holiday periods and Starbucks' slower market recovery due to holiday travel trends and changing holiday patterns affecting customer traffic.

"So, a, is that the case? And then, b, does that mean that Target has been losing consideration on everyday essentials, and so this price investment is obviously aimed at improving those periods where there are not events or holidays?" --- (TGT, earning call, 2025/Q1)

"The market continued to recover slower than expected, with further impacts from the timing of holiday related travel trends." --- (SBUX, earning call, 2024/Q2)

"Macro pressures resulted in traffic contraction this quarter. Performance was impacted by a decline in occasional customers, changing holiday patterns, a highly promotional environment and a normalization of customer behaviors following last year's market reopening." --- (SBUX, earning call, 2024/Q2)

Influence of Earnings Season on Stocks

Earnings season significantly impacts stock performance, as evidenced by Microsoft's double-digit growth in their largest quarter and Google's year-on-year adjustments for clearer comparisons. Seasonal spending trends and specific contributions, like Activision's impact on Microsoft's metrics, further illustrate how earnings reports shape investor perceptions and stock movements.

"Earnings per share was $2.95 and increased 10% and 11% in constant currency. In our largest quarter of the year, we again delivered double-digit top and bottom line growth with continued share gains across many of our businesses and record commitments to our Microsoft Cloud platform." --- (MSFT, earning call, 2024/Q4)

"To help with year-on-year comparisons, we included a table in our earnings release to adjust other cost of revenues, operating expenses, operating income, and operating margin to exclude the impact of severance and related office space charges in the first quarter of 2023 versus 2024." --- (GOOG, earning call, 2024/Q1)

"Second quarter revenue is driven by corporate year-end spending trends in our major markets and holiday season spending by consumers, and fourth quarter revenue is driven by the volume of multi-year on-premises contracts executed during the period." --- (MSFT, sec filing, 2024/Q3)

"At a company level, Activision contributed a net impact of approximately 4 points to revenue growth, was a 2-point drag on operating income growth and had a negative $0.04 impact to earnings per share." --- (MSFT, earning call, 2024/Q3)

Seasonal Changes in Investor Behavior

Seasonal changes in investor behavior are evident through increased client activity and cash realignment despite seasonal pressures (SCHW), seasonal outflows and transfers to investments (C), higher trading assets compared to year-end (JPM), and a significant portion of investors not planning portfolio changes (MS).

"The important point is that we are proceeding through what we've described previously and what Walt talked about at the outset as a transitional year, but frankly at a slightly faster pace than we'd anticipated just 6 months ago. With our organic rebounding towards historical levels, a continued moderation of client cash realignment activity despite seasonal pressures and the impact of very high investor engagement sequential growth in our net interest margin continued expense discipline with adjusted expenses basically flat year over year excluding some unusual items and finally, a steady increase in our capital levels, both our regulatory levels and those inclusive of AOCI." --- (SCHW, event transcript, 2024/07/16)

"And average deposits decreased by 1%, largely driven by seasonal outflows and transfers to investments in Wealth as well as non-operational outflows in TTS. On Slide 10, we show key consumer and corporate credit metrics, which reflect our disciplined risk appetite framework." --- (C, earning call, 2024/Q2)

"Trading assets increased due to higher levels of equity and debt instruments in Markets related to client-driven market-making activities, and compared with seasonally lower levels at year-end; and to a lesser extent, an increase in short-term cash deployment in Treasury and CIO." --- (JPM, sec filing, 2024/Q2)

"Yet, fewer investors are making changes to their portfolio. Half of investors (50%) said they do not plan to make any changes to their portfolios for the next six months, significantly more than last quarter (42%)." --- (MS, press release, 2024/04/18)

"Period-end total assets increased $85.2 billion from December 31, 2023 to $902.7 billion driven by seasonally higher levels of client activity across both Equities and FICC." --- (BAC, sec filing, 2024/Q1)

Global vs. Local Seasonal Patterns

Global seasonal patterns, such as smartphone seasonality, significantly impact TSM's quarterly performance, influencing demand and gross margins. In contrast, Alibaba leverages local seasonal patterns by pre-placing merchandise in overseas warehouses to optimize local shipments, highlighting distinct strategies for managing global versus local seasonal trading patterns.

"Our business in the second quarter was supported by strong demand for our industry-leading 3-nanometer and 5-nanometer technologies, particularly offset by continuous smartphone seasonalities. Moving into third quarter 2024, we expect our business to be supported by strong smartphone and AI-related demand for our leading-edge process technologies." --- (TSM, earning call, 2024/Q2)

"For other categories, that kind of local shipment model can work better. We've done a lot of this in the past as well, pre-placing merchandise into overseas warehouses to be shipped locally." --- (BABA, earning call, 2024/Q4)

"For the second quarter of 2024, we expect our business to be supported by strong demand for our industry-leading 3-nanometer and 5-nanometer technologies, partially offset by continued smartphone seasonality." --- (TSM, earning call, 2024/Q1)

"After that, I will provide the guidance for the third quarter 2024. Second quarter revenue increased 13.6% sequentially in NT, or 10.3% in U.S. dollars, as our business was supported by strong demand for our industry-leading 3 and 5 nanometers technologies, partially offset by the continuous smartphone seasonality." --- (TSM, earning call, 2024/Q2)

"Gross margin increased 0.1 percentage point sequentially to 53.1%, mainly reflecting product mix changes due to smartphone seasonality, partially offset by a less favorable foreign exchange rate." --- (TSM, earning call, 2024/Q1)

Technological Advancements and Seasonal Trading

Technological advancements are driving seasonal trading patterns, with companies like Intel, Google, and Microsoft reporting strong engagement, ongoing investments, and increased AI capacity. These advancements are expected to influence market expectations and seasonal growth, highlighting the critical role of technology in shaping trading behaviors.

"And we'll just say at the low end of seasonality Q1 to Q2 that we saw. And as we go into the second half of the year, we're engaging deeply with our customers today, our OEM partners and we just see strength across the board, right." --- (INTC, earning call, 2024/Q1)

"But looking ahead in Q3, we do expect the same seasonal pattern that you saw last year with respect to margin and we are continuing to invest in the business." --- (GOOG, earning call, 2024/Q2)

"Growth in our per-user business will continue to moderate. And in H2, we expect Azure growth to accelerate as our capital investments create an increase in available AI capacity to serve more of the growing demand.In our on-premises server business, we expect revenue to decline in the low single digits as continued hybrid demand will be more than offset by lower transactional purchasing." --- (MSFT, earning call, 2024/Q4)

"We're sort of pegging the market to 276 to 278 this year, but we were at the low end of seasonality in the first half and so that will help as far as half on half growth." --- (INTC, conference, 2024/06/04)

"From our foundation of research leadership and technical advances, including multi modality and long context, to our global product footprint that gives us opportunities to bring helpful AI to people everywhere, to our world class infrastructure that makes it all possible.Through all of these efforts, we are constantly listening to feedback, making improvements, learning and in trading." --- (GOOG, event transcript, 2024/06/07)