What to Expect From Tech Earnings Season

Earnings season is back! Netflix kicks off the tech sector’s round of December-quarter reports on Tuesday, followed the week after by Alphabet, Microsoft, Apple, Meta Platforms and others. This promises to be an unremarkable quarter, with big companies’ growth rates largely unchanged from the third quarter. That’s not as true for Netflix, which last fall projected its revenue would grow 10.7% year on year in the quarter. That would be the first time it has achieved double-digit growth since the end of 2021.

Since Netflix issued that projection in mid-October, its stock has rallied 39%, lifting its forward sales multiple to around six times, where it was trading in early 2022, according to Koyfin data. Older TV companies such as Walt Disney Co. are trading at less than half that multiple. In other words, Netflix stock is no longer cheap. A misstep—such as weaker than expected December-quarter growth or a disappointing first-quarter projection—could send the stock tumbling. That makes the Tuesday report worth paying attention to.