CS Insights: Q4 '23 Earnings Call Recap
Election and Policy Q’s Ramp up During Fourth Quarter Earnings Season
Questions and comments regarding the impact of who resides in 1600 Pennsylvania Ave. rose sharply during the most recent round of public company earnings calls, as investors and analysts begin their pre-election analysis of how policy will impact growth and profitability.
During the first three months of the year, the number of political-related questions rose to the highest level since the same period in 2021, when the country was adjusting to a new president and recovering from the events of January 6th.
The surge underscores how much uncertainty remains in investors’ minds despite the prospect of an election that is likely to re-run many of the same themes as four years ago.
Based on prior presidential election cycles, we would expect a steady increase in the number of questions each quarter. Note – Q2 2020 was unusual in that the COVID-19 pandemic dominated earnings calls.
Hot advertising market….for politics
One of the most-raised political topics in the quarter wasn’t even about the impact of a specific policy – it was instead about the benefit media companies (notably TV broadcasters) could see from increasing political advertising spend as the year progresses.
We saw this topic even creep into other industries, like retail, where Best Buy and Lulu’s both warned of marketing inflation associated with a competitive ad market due to the election and Summer Olympics.
Certainly less uncertain
We observed a notable decrease in the number of executive comments about an uncertain macro environment, with total references declining by more than 30% compared to the fourth quarter of 2023. This continues a trend that accelerated last year as “uncertainty” references peaked in the fourth quarter of 2022 and steadily decreased throughout 2023.
Will tariffs return?
The prospect of a second Trump administration has started to raise the specter of fresh tariffs. Commentary and questions about tariffs spiked during the first Trump administration and then all but stopped once President Biden took office. We saw a slight increase in questions about tariffs in Q1, with a number of new questions specifically tied former President Trump’s policies. We suspect the topic may garner more attention as the campaign rhetoric heats up.
