Stock Market Bleak Before Microsoft Earnings

Microsoft's share price dropped more than 15% from the peak of 349.67/share meanwhile, major US equity markets are underperforming as NDQ is down 13.92%, SPI500 8.86% and DOW is 7.41%. This market-wide drawback is likely due to general market fear due to the potential of multiple Fed rate hikes in reaction to inflation the tension in Eastern Europe and the Middle East. Also, more specifically, Microsoft investors may be a bit more than apprehensive about its most recent substantial acquisition.

Microsoft Corporation is expected* to report earnings on 01/25/2022 after market close. The report will be for the fiscal Quarter ending Dec 2021. According to Zacks Investment Research, based on 11 analysts' forecasts, the consensus EPS forecast for the Quarter is $2.29. The reported EPS for the same Quarter last year was $2.03. if the result comes out worse than expected, we could see the share price test $280, the lowest level seen since 21/10/2021.

Compounding this effect, Microsoft announced it will buy major publisher Activision Blizzard for a staggering $68.7 Billion, the largest acquisition in the gaming industry ever. In the longer-term, we could see the potential of Microsoft stock price hit its previous peak and move toward $400 by the middle of 2022.