Microsoft Q4 FY6/22 Earnings Review
Full fundamentals review, stock price targets and stop-loss levels follow.
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Big Dog Strikes Again
If you are going to invest and/or trade in quoted securities, you need a number of things. Some money, sure, and a brokerage account and all that. But over and above the things that Motley Fool or Investopedia - great sites, both - will tell you about, you need a sense of humor and an ability to tune into the market to the exclusion of reality. The late and truly great F1 driver Ayrton Senna observed many times that his best work was done, his best races won, when he stopped actively thinking, relaxed into an autonomic state, became as one with the racecar and got the job done in a more or less trance-like state. And there are moments in investing when a similar state of mind can be achieved. When everything you have consciously learned about fundamentals, macro, momentum, all that, just sits in the background letting your informed instinct respond to the market’s ongoing attempts to relieve you of all your money.
The market this week so far has been that way. With FOMC today and tomorrow (statement tomorrow, Wednesday), plus Big Tech earnings starting today with Google and Microsoft, all in the context of is-inflation-falling-or-not and is-the-Fed-actually-tightening-further-or-not debates, nothing in the market has been straightforward. It is at times like these that technical analysis is your friend, because you can expect the major indices and the big liquid stocks to trade to technical patterns whilst in a vacuum of real facts. In staff personal accounts over the last ten days or so we have been trading TQQQ (3x long Nasdaq) and SQQQ (3x short Nasdaq) in an alternate and sometimes simultaneous manner in order to try to win some free money from all the no-new-news ups and downs. It’s gone well so far, but we always have tomorrow to mess it up.
Coming into the close today (Tuesday 27 July) the market dumped and then puked and dumped some more. Our SQQQ position was up nearly 6% on the day at its peak. At the close and whilst waiting for the MSFT print, it eased off some, so we took gains to the bank and began slowly adding to a small TQQQ position we had opened earlier in the day.
(Note, if you want to trade along with us, we disclose all such trades before we place them, with real-time alerts, in our premium Growth Investor Pro service).
As the close hit, MSFT dropped a couple points and when the print came - a miss vs. consensus - the stock dropped further. Obviously it was Officially All Over For Tech Again. GOOG had already announced a miss, so, that was that. Everybody head back to XOM for the win.
But GOOG stock had gone … up … in the minutes since the close. On a miss.
Hm.
Microsoft numbers arrived and we got busy. We said to our real-time subscribers at 5pm Eastern, “Microsoft’s going to be fine”. Here’s why we said that, and here’s what happened right afterwards.
The chat box you see there is us saying that the underlying revenue growth at Microsoft remains very strong, despite the drop in headline growth rates. You can see it in the RPO (“remaining performance obligation”) numbers.
And the chart is a 5-min chart which shows that about an hour later (the chat timezone is London, the chart timezone New York) when the MSFT CFO said, we just had our best order intake quarter ever, the stock rocketed upwards.
Below, for our paying subscribers here only, we walk through the full financial fundamentals of the Microsoft earnings print, we lay out our valuation analysis and we provide chart analysis with stock price targets and suggested stop-loss zone.
If you’re not a paying subscriber but you’d like to sign up - for these speedy earnings analyses and other actionable calls in tech stocks - you can join us by clicking the link below. Signing up in July gets you 1/3 off the annual rate - you’ll pay just $99/yr rather than the $149/yr rack rate.