Netflix and Other Tech Stocks Report Earnings Soon. What to Expect.

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The first-quarter tech earnings season is just around the corner, and Wall Street is getting just a wee bit nervous.

This quarter’s results will be the first to reflect the impact of Russia’s invasion of Ukraine, while also factoring in a sharp jump in both interest rates and fuel prices. There are concerns that consensus estimates are simply too aggressive for some companies.

J.P. Morgan analyst Doug Anmuth on Friday trimmed his earnings estimates for the March quarter by as much as 4% for 11 internet companies, to reflect an assortment of macroeconomic factors. His list starts with the Russia-Ukraine war and its “spillover” effects, primarily in Europe. Anmuth also says brand advertising softened in the quarter, “as marketers avoided ad placements near controversial content.” And he sees risks of lighter consumer spending given higher inflation and spiking gas prices in particular.

Anmuth reduced his estimates for all of the online advertising-driven names in his coverage universe, including

Alphabet

(ticker: GOOGL),

Meta Platforms

(FB), S

nap

(

SNAP

),

Pinterest

(PINS),

Twitter

(TWTR), and

Criteo

(CRTO). “We expect the ad names to continue to decelerate though Q2 and for most of them to face margin compression in 2022,” he writes, citing increased hiring, a return to offices, and more normalized travel and entertainment expenses.

He also notes that both

Netflix

(NFLX) and

Spotify

(SPOT) have direct exposure to Russia and could lose 1 to 2 million subscribers each in the first half as both companies have shut down services there. He is trimming estimates on both

Booking

(

BKNG

) and

Airbnb

(

ABNB

) to reflect their exposure to the Eastern European market. And he is slightly trimming estimates on

GoodRx

(GDRX).

Anmuth writes that his top picks include

Amazon.com

(AMZN), where he expects both revenue to reaccelerate and margins to expand in the second half of 2022. Other favorites include Netflix in subscriptions, Snap in social media, and Uber as a post-pandemic recovery story.

Netflix will kick off the tech earnings season on April 19.

Write to Eric J. Savitz at [email protected]