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Meta, Amazon, and Alphabet to Release Q2 Earnings

Plus500 | Monday 25 July 2022

Earnings season is set to continue in full force this week as three of the largest names in the U.S. tech industry reveal how they fared in the second quarter of 2022. With Meta, Amazon, and Alphabet all set to release quarterly results in the coming days, investors may want to keep their eyes peeled in order to get a better handle on how these tech giants dealt with market volatility this spring.


Meta to Mark Milestone?

Social media giant Meta (META) is expected to release Q2 2022 results on Wednesday following the ring of the closing bell. According to some analysts, this parent company of some of the most popular social media platforms on Earth could be set to mark a dubious milestone this week.

While Facebook, Instagram, and WhatsApp all come under the Meta umbrella and each boast a multitude of active users, strong macroeconomic headwinds have been buffeting the firm in recent months. A confluence of factors both shared by the global economy as a whole and specific to Meta, in particular, could make the 27th’s earnings call a gloomy one.

As is well-known to the savvy investor, geopolitical volatility and rising inflation have made profitability an uphill climb for many sectors of the economy. For Meta, record rises in consumer prices have made advertisers less keen to open their wallets. Furthermore, a strong greenback and the company’s decision to divest from Russia has taken a chunk out of foreign revenue sources. 

Recently, changes to Apple’s (AAPL) privacy policy have made tracking users more difficult, and thus led to complications in generating targeted ad revenue. Moreover, the pivot toward the still-nascent metaverse led by CEO Mark Zuckerberg has yet to bear significant financial fruit.

It is against this backdrop that some experts foresee an unprecedented drop in revenue for Meta being revealed on Wednesday. Even if the firm manages to beat market estimates of a 0.6% year-over-year drop in revenue to just over $29 billion, it may not be enough to encourage investors on Wall Street. Meta shares are down by almost half so far this year, and Q2’s earnings per share (EPS) figure is expected to come in at $2.51, a more than 30% annualised decline. How the markets might react to this drop and whether Meta will recover in the quarters to come remains to be seen.

Amazon’s Ship Stays Steady

On Thursday after market close, online retail and all-around tech leader Amazon (AMZN) is expected to release Q2 numbers. Some market watchers may be looking to see how large an effect the negative market mood taking hold among U.S. consumers may have had on this megafirm’s bottom line.

According to many experts, Amazon’s revenue for the second quarter of 2022 may have grown at the slowest pace for over two decades. A couple of important factors have been pointed out as potential causes of this milestone, such as the intransigent inflation rates seen in the United States as well as continuing fears of a possible recession coming down the pike.

Estimates are for Thursday’s EPS results to hit 15 cents, with revenue reaching $119.4 billion. While this would represent positive growth for the quarter, the coast is not yet clear. If the global economy does indeed slip into a recessionary spiral, Amazon’s core business strategy could be in for some choppy waters ahead. With the firm having lost over 26% of its stock value so far in 2022, this might prove cause for concern.  (Source:Barrons)

Alphabet Leads the Pack

Tomorrow after market close, Google’s parent company, Alphabet (GOOG) is expected to release quarterly results as well. Like many of its peers in the American tech sector, the general negativity felt in many corners of the market may have had a noted effect on Alphabet’s numbers.

However, many analysts foresee Alphabet pulling away from the pack on Tuesday. In contrast to other Big Tech firms, strong revenue growth for Q2 is predicted. Earnings per share are expected to be $1.28, a year-over-year rise of 3.6%. In turn, revenue for the quarter is estimated to have risen by over 14% to just under $70.6 billion.

Alphabet’s divergent fortunes, when compared to industry peers, may be attributed to its flourishing search sector. While Apple’s aforementioned privacy policy changes have taken a noted toll on social media platforms’ ad revenue, YouTube and Google advertising has not been similarly affected. In fact, it’s expected that Google Services, fueled by ads on these two corners of the web, will show revenue growth of over 11%. Alphabet execs may be hoping a positive quarterly report will aid in recouping some of the firm’s 25% drop in share price since the top of the year.

While all three of these tech giants have faced significant challenges so far in 2022, it’s expected that their quarterly reports will differ significantly this week. What this means for their share prices and Wall Street trading results as a whole is still unknown.

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