The first earnings season of 2023 is in full swing this week as a series of top firms across diverse economic sectors prepare to release their latest quarterly results. In the coming days, some of the United States’ most important financial institutions, as well as streaming pioneer Netflix, are expected to show the public how their bottom lines fared over the last quarter of 2022.
Big Banks Continue Earnings Season
Tomorrow, Tuesday, before the opening of the trading day, venerable player in the New York banking industry Goldman Sachs (GS) is set to release Q4 2022 quarterly earnings. Morgan Stanley (MS) is expected to release its fourth-quarter earnings report Tuesday before the ring of the opening bell as well. The macroeconomic environment proved to be challenging for Goldman Sachs and Morgan Stanley, shares of which lost 10% and 13% of their value over the course of 2022 respectively.
One major factor that could affect tomorrow’s results is expected to be the decisions taken by the Federal Open Market Committee (FOMC) over the past year. The FOMC, which determines the course of monetary policy for the world’s largest economy, has been hawkish with regard to interest rate hikes in recent times in the attempt to rein in record high inflation rates.
Many analysts foresee net interest income being buoyed by the steep increase in interest rates instituted by the Fed, but the coast is not yet clear. A slowing economy has led to a drop in deal-making in recent months, which may have been the proximate cause behind Goldman Sachs’ decision to cut its payroll by two percent last month. Estimates are for Goldman Sachs’ Q4 2022 earnings per share (EPS) figure to come in at $6.13, a year-over-year decline of more than 40% from the year-ago figure.
Morgan Stanley is also expected to reveal a significant year-over-year decline in earnings per share tomorrow. If estimates are proven correct, the firm’s Q4 2022 EPS will be around $1.32, representing a decline of more than a third from Q4 2021’s equivalent figure.
However, despite the somewhat gloomy forecasts, Morgan Stanley and Goldman Sachs could still continue the trend set by last week’s big bank earnings and beat expectations. Whether tomorrow’s results manage to restore investor confidence in the New York banking industry remains to be seen.
Entertainment giant Netflix (NFLX) is set to release Q4 2022 earnings on Thursday following the end of the trading day on Wall Street. While expert estimates seem to be broadly positive, it's still expected that the fourth-quarter numbers to be revealed on Thursday afternoon will show a significant slowdown in growth for the streaming pioneer.
Q4 revenue is expected to come in at around $8 billion, which would represent quarterly growth having slowed by nearly 75% compared to Q4 2021. In addition, new subscriptions are estimated to be 4.5 million, a drop of almost half from the 8.3 million subscribers added over the course of the final three months of 2021. (Source:Forbes)
Netflix shares dropped in value by over 51% over the course of 2022. While the streaming platform’s stock has been on an upward trend so far this January, it is still unclear whether Thursday’s report will help or hinder this pattern in the trading days to come.
Significant economic headwinds have put major American firms across the marketplace to the test in recent months. This week’s earnings could shed light on which sectors have most successfully faced up to the challenges of recent times.