Facts: Guide to this week’s Faang reports
Tuesday, January 31: It’s a soft start with Stockholm-based Spotify, which with its strong position in the music and podcast market sometimes gets to participate when Faang is discussed. On average, analysts expect Spotify to report a loss per share of 1:29 euros on a turnover of almost 3.2 billion euros.
Wednesday February 1: Time for report from Meta Platforms with flagships like Facebook and Instagram in the portfolio. Meta is expected to report earnings per share of $3.01 per share on revenue of 31.6 billion for the fourth quarter.
Thursday, February 2: The culmination, however, comes only when Amazon, Alphabet and Apple report. Amazon expects earnings per share of 52 cents and revenue of nearly $146 billion for the fourth quarter. Alphabet is expected to report a profit of 1:31 dollars per share and a turnover of 64.5 billion. Apples, reporting the first quarter of its broken financial year, is expected to report a profit per share of 1:94 dollars on a turnover of 121.5 billion.
Source: Bloomberg
About a quarter of America’s 500 largest publicly traded companies — in the S&P 500 index — have already reported financial results for 2022. It’s looking pretty good so far. Most, around 70 percent of the reporters have met expectations.
But this week it’s time for four of the really big technology behemoths on Wall Street – the so-called Faang companies – to cable their results for the fourth quarter of last year and the growth prospects for this year on the market: Facebook owner Meta Platforms on Wednesday following by iPhone maker Apple, e-commerce giant Amazon and Google owner Alphabet on Thursday,
The fifth company that is formally part of the Faang club – the streaming giant Netflix – has already presented its financial statements. It showed a significantly stronger growth in the number of subscribers than expected, net plus 7.7 million against the average forecast of 4.5 million.
Spotify raising prices?
And the money is pouring in. Netflix’s so-called free cash flow last year totaled $1.6 billion, which can be compared to a target of $1 billion. And this year, cash flow is expected to almost double to $3 billion – which, if there are no big, expensive acquisitions, can be distributed to owners in the form of buybacks during the year, according to Netflix.
The Swedish contribution in the segment, the streaming service Spotify, plans to present its accounts on Tuesday.
In light of this, Spotify has joined the growing number of companies in the sector that are cutting staff, with a notice of 6 percent of the positions in the company – around 600 positions. And ahead of the report, there is currently speculation as to whether Daniel Ek and his company have to turn their backs on competitors Apple and Amazon and raise prices to raise their margins.
A total of 52,000 staff cuts have been announced before the reports from the Faang companies. And on the stock exchange, there has been a thumbs up for the radical measures, which open up increased profitability.
Took the most beating
Many investors also expect the Faang companies to get a windfall when inflation subsides. And among analysts, expectations are high after the disaster year of 2022 – where the drastic rate hikes in the inflationary shock hit all types of growth stocks hard.
Meta Platforms took the biggest beating on the stock exchange last year, with a price crash of 64 percent. But it was price slaughter that applied to the entire exclusive club: Netflix plummeted 51 percent, Alphabet 39 percent, Amazon 50 percent. Apple fared best, but even there it was a substantial loss: down 27 percent.
According to The Wall Street Journal, the Faang companies together lost more than 3,000 billion dollars (just over 31,000 billion kroner) in value last year. This corresponds to approximately 25 Swedish state budgets of the size of 2023.
Since the turn of the year, however, things are pointing straight up for the whole gang: Meta Platforms plus 26 percent, Apple plus 12, Amazon plus 22, Netflix plus 22 and Alphabet plus 13 percent.
Big so-called upside
Despite the rapid price rise, many analysts have a significantly higher target price for the shares than the current price. This so-called upside – which is by no means a guarantee of price increases – is, for example, around 27 percent for Alphabet and 20 percent for Apple.
According to the analysts, Netflix has the worst outlook, where the average target price is below Friday’s rate despite the strong financial results.
The software and cloud giant Microsoft – which is sometimes also compared to the Faang companies – has had some headwinds on the stock market since the reports earlier this week, even though results and revenues looked good.
The stock is in and of itself at a plus for the year, but only by 3 percent, which can be compared with the Nasdaq composite index of plus 11 percent. What is causing many analysts and investors to raise warning flags is the uncertain growth prospects for Microsoft’s Azure cloud service.