FAANGs to Report their Quarterly Results

FAANGs

FAANG is the acronym that refers to popular tech companies Facebook (now Meta), Amazon, Apple, Netflix and Alphabet (Google).

Apple released strong results last week, since its quarterly Revenues surged 11% year-over-year to a record of $123.9 billion, sending AAPL.us higher on Friday.

Netflix was the first of the FAANGs to report, and despite solid results overall, the stock collapsed dramatically due to disappointing subscriber growth guidance for Q1 2022.

During the current week, the remaining three of the group, announce their quarterly results.

This earnings season takes place in a backdrop of poor performance of the US stock markets and the tech sector in particular, mostly due the Fed's recent hawkish pivot and aggressive tightening prospects.

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FXCM's FAANG Stock Basket registers more than 10% drop this month, after having peaked in November, while NAS100 is also in correction territory with similar losses.

Meta (Facebook)

The company releases its financial results for the fourth quarter of 2021 on Wednesday February 2, after market close.

In late October, the company had changed its name into Meta, highlighting its effort to bring the Metaverse into life. Consistent with this pursuit and starting with Wednesday's results, Meta will also change its reporting format, making Facebook Reality Labs (FRL) a separate reporting segment.[1]

This will include augmented and virtual reality related consumer hardware, software and content. The other reporting segment, will be the Family of Apps (FoA), which encompasses Facebook, Instagram, Messenger, WhatsApp and other services.

So there will be a lot for markets to chew through, apart from the Revenues, which Meta had projected to be in a range of $31.5 billion to $34 billion in Q4 2021. This compared to $28.276 billion in Q3 2021 and $27.187 billion in Q4 2020.

Meta expected headwinds from Apple's iOS 14 privacy changes to persist into the fourth quarter, so we will be looking for any fresh commentary around the issue.

The social media giant has faced increased regulatory scrutiny in the United States and abroad. In late November, it was ordered by UK's Competition and Markets Authority (CMA) to sell GIPHY, a firm that allows users to find and share GIFs, Stickers, Clips and more. Meta appealed against CMA's decision on the Competition Appeal Tribunal. [2]

FB.us had risen to all-time highs in September (384.49), but had a mixed fourth quarter, while January is negative.

Amazon

The retail and cloud services giant publishes its Q4 2021 results on Thursday Wednesday 3, after markets close.

Back in October, it had reported poor Q3 results and forward guidance that had not thrilled markets. It had projected Q4 Revenue of $130 - $140 billion, compared to $110.812 billion in the third quarter of 2021 and $125.555 billion in Q4 2020. [3]

Amazon also projected Operating Income in the range of $0 and $3.0 billion, significantly lower from $4.852 billion in Q3 2021 and $6.873 billion a year ago.

Investors will likely focus once again on Amazon Web Services (AWS), which was the bright spot of the previous report, having generated Revenue of $16.11 billion in the third quarter, a significant jump from $11.601 billion a year ago.

Amazon was definitely one of the winners of the pandemic era, as people turned to online shopping and companies to cloud services. Covid-19 restrictions are lifted though, potentially posing challenges to its retail dominance.

Amazon has walk-in stores in the US and UK and recently opened its first ever brick and mortar apparel store called Amazon Style, located in Los Angeles. [4]

Amazon has also been in the crosshairs of regulators around the world, having recently received a hefty fine, by the Italian competition authority, the Autorità Garante della Concorrenza e del Mercato (AGCM).

AMZN.us had an underwhelming fourth quarter with small gains and sheds around 12% during the current month.

Alphabet (Google)

Alphabet is the one to kick the week off for FAANGs, since it announces its financial results for the fourth quarter of 2021 on Tuesday February 1, after market close.

For the third quarter of the year, the firm had reported record revenues of $65.1 billion - a 41% year over year rise. As per Investing.com earnings calendar, it is now expected to report Revenue of $72.19 billion for the fourth quarter of 2021. [5]

Google Advertising had generated $53.13 of those during the third quarter, with Youtube ads jumping to $7.205 billion, from $5.037 billion in Q3 2020.

CFO Alphabet and Google Ruth Porat, had commented that the iOS 14 privacy changes had "a modest impact on YouTube revenues".[6]

Markets will also be looking at the Cloud segment, which had brought in $5 billion in Revenues in Q3 – up 45% year-over-year.

Alphabet is another tech juggernaut that has come under increasing scrutiny, with the company pushing back. In January, it filed a motion to dismiss Texas Attorney General antitrust lawsuit over the advertising technology ("ad tech") business.[7]

GOOG.us had a profitable fourth quarter and registered record high in November (3,037.98), but during the current month it retreats, in line with the broader stock market.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 31 Jan 2022 https://investor.fb.com/investor-news/press-release-details/2021/Facebook-Reports-Third-Quarter-2021-Results/default.aspx

2

Retrieved 31 Jan 2022 https://www.catribunal.org.uk/cases/142941221-meta-platforms-inc

3

Retrieved 31 Jan 2022 https://ir.aboutamazon.com/news-release/news-release-details/2021/Amazon.com-Announces-Third-Quarter-Results/

4

Retrieved 31 Jan 2022 https://www.aboutamazon.com/news/retail/amazon-reimagines-in-store-shopping-with-amazon-style

5

Retrieved 31 Jan 2022 https://www.investing.com/equities/google-inc-c-earnings

6

Retrieved 31 Jan 2022 https://abc.xyz/investor/static/pdf/2021_Q3_Earnings_Transcript.pdf

7

Retrieved 02 Jul 2022 https://blog.google/outreach-initiatives/public-policy/ag-paxtons-false-claims-still-dont-add-up/

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