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BIG Earnings Week

As the first month of 2023 comes to an end, we are faced with BIG earnings in Tech and other Sectors


Of all the earnings being reported this week the main two that stand out the most are:


META & APPLE


The earnings reports of individual companies, such as META Stock and Apple, can have a significant impact on the stock market. If a company's earnings surpass expectations, its stock price may increase, leading to a positive impact on the overall stock market. Conversely, if a company's earnings fall short of expectations, its stock price may decrease, leading to a negative impact on the stock market. Additionally, strong earnings from a company can boost investor confidence, leading to increased buying and a positive impact on the stock market, while weak earnings can cause a decline in investor confidence, leading to increased selling and a negative impact on the stock market.


Meta Platforms (META) - Reports after the close, Wednesday, Feb. 1

Wall Street expects the Facebook parent to earn $2.21 per share on revenue of $31.44 billion. This compares to the year-ago quarter when earnings came to $3.67 per share on revenue of $33.67 billion.

What to watch: Meta Platforms suffered the biggest losses among its FAANG peers in terms of market cap percentage in 2022. Roughly $450 billion of its market cap disappeared. Aside from slowing user growth and prolonged weakness in digital ad business at its core Facebook and Instagram products, there’s increasing investor concerns whether the company can effectively compete with the likes of TikTok. However, in 2023, even amid inflationary cost pressures and struggles with daily active users, Meta can still beat profit expectations, which are low. Although the company is heavily reliant on digital ad spending growth to fund its various initiatives and to generate free cash flow, the stock nonetheless presents a compelling risk-versus-reward opportunity at current levels. Its shares are priced at just fifteen times forward earnings, while the business still generates strong free cash flow. With a consensus analyst price target of $152, which suggests 26% upside from current levels, Meta stock should be on any short list of stocks to buy in 2023. The company on Wednesday will nonetheless need to show improvements in its Reality Labs, demonstrating that the business can emerge as Meta’s profit center that it is expected to become.


Apple (AAPL) - Reports after the close, Thursday, Feb. 2

Wall Street expects Apple to earn $1.95 per share on revenue of $121.9 billion. This compares to the year-ago quarter when earnings came to $2.10 per share on revenue of $123.94 billion.

What to watch: Driven by prolonged monetary tightening, the tech-heavy Nasdaq Composite Index which suffered the worst of the three major averages, lost 34% to end 2022. Among the biggest decliners were large-cap technology stocks such as Apple which lost 22% of its value, logging the third-worst performance since 2000. Although Apple ended the year as the world's most valuable company, it suffered a massive market cap decline of roughly $755 billion, ending the year with a market valuation of $2.07 trillion. However, after licking their wounds in 2022, Apple investors have some strong catalysts to be excited about in 2023. To be sure, inflation continues to drive higher operating expenses for several companies like Apple, which remains a headwind for its profit margins. It’s still hard to ignore the attractive valuation in Apple heading into 2023. While iPhone sales generate a sizable portion of revenues, Apple’s collective high-margin Services businesses are also growing. Apple Services segment in 2022 generated a gross margin of 72%, compared to 36% for hardware and devices. In 2023, investors can expect stronger revenue growth and margin expansion, thanks to price increases on Apple Music, TV+ and its One bundle. It remains to be seen if the Services segment power the company through what is expected to be a tough hardware environment. Apple shares have not performed as well as investors would have liked, with a consensus analyst price target of $176, which suggests 30% upside from current levels, Apple stock should be on any short list of stocks to buy in 2023.


Another obviously notable earnings this week to watch is Amazon on Thursday after Market close, and Alphabet (Google) on Thursday after market close.


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