Earnings season is here with us once again, with a fifth of S&P 500 companies having reported first-quarter 2022 earnings so far. According to the latest FactSet update, 79% of S&P 500 companies have beat earnings estimates while 69% have exceeded revenue expectations.
The pivotal energy sector is expected to emerge as the biggest winner this earnings season, with Wall Street projecting that companies in the sector will report nearly 260% bottom line growth, far above the 6.6% blended earnings growth projected for S&P 500 companies, while revenues are expected to expand at a brisk 47%, again well beyond the S&P 500’s 11% clip.
Still, all eyes will be trained on the so-called FAANG quintuplet of giant technology and internet companies when they report earnings in the current week, with only Netflix Inc. (NASDAQ:NFLX) having returned its Q1 scorecard so far.
NFLX shares have been badly hammered after the video streaming company beat profit expectations but sharply underperformed on subscribers. NFLX stock has cratered nearly 40% since its earnings announcement, wiping out more than $50B off its market capitalization.
Last Tuesday evening, NFLX shocked investors after its earnings report showed it had lost 200k subscribers during the quarter and said it expects to lose another 2M in Q2. That was in stark contrast to Wall Street’s estimates that called for Netflix to increase subscriber numbers by around 2.5M in Q1 and another 2.4M in Q2.
NFLX stock had been selling off since October mainly on concerns that the subscription market was becoming saturated while viewers were becoming less inclined to binge on video now that pandemic restrictions were being lifted. The stock hit a 52-week high of $700.99 on Nov. 17 but closed at $209.80 on Monday, good for a massive 70% correction.
In a bid to counter revenue lost from declining subscribers, Netflix co-Chief Executive Reed Hastings has suggested that the company could introduce an ad-supported level that would cost less than current subscription plans, and also begin cracking down more on customers who share their account credentials with people outside of their households.
Without further ado, here’s a rundown of how the other four members of the FAANG group are expected to perform in the ongoing earnings season.
#1 Meta Platforms
Facebook parent Meta Platforms Inc.(NASDAQ:FB) on April 27th after the market closes. The social media giant is expected to post quarterly earnings of $2.60 per share in its upcoming report, representing a 21.2% Y/Y decline while revenues are expected to be $28.3 billion, up 8.1% from the year-ago quarter.
FB stock famously crashed 25% in February, erasing more than $220 billion in market value to mark the biggest single-day equity wipeout ever, after the company released a disappointing earnings report. The stock has continued to fall after a negative note from Cleveland Research, whose checks indicate that current-quarter business has tanked.
According to the firm, FB is facing challenges in inflation in CPM rates, a drop in conversion rates, and targeting changes while nearly half of agencies are set to miss their ROI goal.
FB stock is down 45.2% in the year-to-date.
Amazon Inc. (NASDAQ:AMZN) will disclose its 2022 Q1 financial results on April 28th after the market closes. Wall Street expects Amazon’s earnings per share to decline 46% Y/Y to $8.48 while revenue is expected to increase 7.2% to $116.3 billion.
The general feeling about Amazon is that while the company’s e-commerce segments don’t look very promising due to a poor macroeconomic outlook, AWS and advertising may be strong enough to balance the equation for the e-commerce titan. Indeed, company CEO Andy Jassy has recently warned that macroeconomic headwinds are trimming the company’s profitability in the short term while Amazon’s subscription services could also show deceleration in-line with Netflix’s.
Thankfully, Amazon’s Web Services(AWS) continues being the company’s real cash cow, and it should continue to compensate for e-commerce’s financial losses. Amazon’s fast-growing ad business is also expected to show some market share and margin expansion.
Last month, Apple Inc. (NASDAQ:AAPL) announced that it will release its earnings report for the fiscal second quarter of 2022 on Thursday, April 28. Wall Street is expecting Apple to report revenues around $94 billion and earnings-per-share of $1.43. That's an uptick from expectations for the March quarter in January, which hovered around $90.3 billion.
Wedbush Securities says that results by Apple and Microsoft Inc. (NASDAQ:MSFT)"could dictate the path of tech stocks over the coming months."
Luckily, Apple appears to be in a good position to do just that.
Apple did not provide any official guidance for Q2 2022 due to uncertainty caused by manufacturing disruptions and the COVID-19 pandemic. However, Apple CFO Luca Maestri said in January that the “very strong customer response to our recent launch of new products and services drove double-digit growth in revenue and earnings.”
Google’s parent company Alphabet Inc. (NASDAQ:GOOG) reports Q1 earnings after market close on April 26.
After enjoying a bumper year in 2021, investors will be watching to see if Google can maintain its strong momentum in 2022. Unfortunately, Wall Street is not very optimistic, and expects the company's earnings per share to decline for the first time in seven quarters. Analysts estimate EPS of $25.65 vs. $26.29 in Q1 FY 2021.
First quarter revenue is expected to come in at $68.2B, good for 23.4% Y/Y growth but marking the slowest growth in six straight quarters.
Enterprise software behemoth Microsoft Inc. (NASDAQ:MSFT) is slated to report Q1 2022 earnings on April 26th after the market closes. The consensus EPS Estimate is $2.20 (+12.73% Y/Y) and the consensus revenue estimate is $49.05B (+17.61% Y/Y).
In Office 365, healthy revenue growth is likely to be driven by the same factors as Q2 with similar seat growth across customer segments and continued momentum in E5. In Dynamics, the company expects revenue growth in the mid-20% range driven by strength in Dynamics 365. In Gaming, revenue growth is seen in the mid-single digits.
For Intelligent Cloud, the company expects revenue between $18.75 and $19B, to be driven by Azure consumption business.
Over the last 2 years, MSFT has beaten EPS estimates 75% of the time and has beaten revenue estimates 88% of the time.