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Q2 Earnings Season Continues with Netflix, Snap, and Twitter

Plus500 | Monday 18 July 2022

With stock markets across the globe having struggled to maintain share values in the face of economic and geopolitical turmoil, traders may be waiting with bated breath for the second-quarter results of three major American tech firms. With Netflix, Snap, and Twitter expected to release Q2 earnings in the coming days, this week could provide a closer look into how these firms grappled with spring 2022’s significant headwinds.

Q2 article

Netflix Buffers Over Subscriber Growth

Netflix (NFLX) is set to release Q2 results on Friday after the close of trading. This firm was considered by scores of analysts as one of the big winners of the COVID-19 pandemic era. With stay-at-home orders throughout the world providing a huge customer base hungry for entertainment, subscription numbers rose throughout most of 2020 and 2021. Netflix’s share value jumped in tandem over the same period.

However, 2022, in the estimations of many, has not been as kind to the fortunes of this streaming pioneer. U.S. tech stocks tend to suffer more than average from the rumblings of a risk-averse mood on the market, and this downturn has been no exception. Netflix has suffered even more than most.

So far this year, the firm’s share value has dropped by a whopping 68.6%. According to industry experts, part of this decline can be attributed to the increasing competition in the streaming video sphere from venerable firms like Apple (AAPL) and Disney (DIS). Netflix’s market share has especially suffered among Millennial and Gen-Z customers. It’s predicted that, on Friday, the company’s subscriber rolls will be shown to have shrunken once again, for the second consecutive quarter.

Consensus estimates for the 22nd’s results are for quarterly revenue to hit $8.03 billion, an over 9% increase from the year-ago figure. Earnings per share (EPS) aren’t expected to budge much and come in at $2.96.

Going forward, some significant changes to the firm’s business model seem to be in various stages of formulation in the firm’s executive suite. While Netflix has never resorted to mid-program advertising in the past, this may stand to change in the near future, as subscribers will be able to choose a cheaper, ad-supported streaming membership option. It remains to be seen whether this shift will be able to bring back some of the members Netflix has lost so far this year.

Snap Crackles Under Privacy Policy Changes

Snap (SNAP), a big player in the social media game in the U.S., is expected to release Q2 results to the public after the closing bell rings on Thursday. Traders may be especially interested in Snap’s earnings in order to get a better handle on how Apple’s (AAPL) privacy changes may have affected the firm.

Like other peers in the social media industry, Snap has lost much of its stock value so far this year, declining by over 70% since New Year’s. However, this firm may have been especially affected by the aforementioned changes to privacy policy which have made tracking user activity more difficult, thus reducing the effectiveness of ad targeting.

Experts expect that Thursday’s Q2 release will show revenues of $1.15 billion, a rise of more than one-third over the figure for 2021’s second quarter. However, EPS is predicted to have declined by eleven cents to a loss of $0.01.

Twitter Makes Waves

Twitter (TWTR) has grabbed a fair share of the headlines in many journalistic outlets due to the travails surrounding the firm’s acquisition agreement with Tesla founder and multibillionaire Elon Musk. Since the announcement that the world’s richest man would move to buy Twitter out at a price of $54.20 per share made waves earlier this year, the two sides have come to a sharp disagreement regarding the presence of fake accounts on the platform, and could very likely end up in court.

Twitter’s top executives have contended that Musk’s public disparaging of the firm’s management has exerted a downward pull on share price, which has marked a 12.7% loss so far in 2022. Following Twitter’s expected Q2 earnings release on Friday, investors morning may get a better understanding of how revenue might have been affected as well.

According to experts, Twitter is expected to post a loss per share of $0.06, a sharp decline from last quarter’s EPS figure of $0.77. Conversely, Q2 revenue may have increased by nearly 12% from last year’s second-quarter figure to top $1.3 billion.

The U.S. economy has been buffeted by jitters and concerns from various directions so far in 2022, with the tech industry proving no exception. Following this week’s earnings releases, traders may have increased comprehension both of how various firms have dealt with these challenges as well as where their ships are likely to be steered over the near term.

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