How To Trade Microsoft Stock Before And After Q1 Earnings

Zinger Key Points
  • Analysts estimate Microsoft will print earnings per share of $2.32 on revenues of $49.84 billion.
  • Microsoft is trading in a confirmed uptrend, printing a series of higher highs and higher lows.
How To Trade Microsoft Stock Before And After Q1 Earnings

Microsoft Corporation MSFT is set to print its first-quarter 2023 financial results after the market closes on Tuesday. The stock was trading over 1% higher heading into the event.

When the tech giant printed its fiscal fourth-quarter results on July 26, the stock fell in after-hours trading but gapped up to start the following trading day and rallied 6.69%.

For that quarter, Microsoft reported an EPS of $2.23 on revenue of $51.9 billion. Both numbers missed the consensus analyst estimates of $2.30 and $52.47 billion, respectively.

For the first quarter, analysts estimate Microsoft will print earnings per share of $2.32 on revenues of $49.84 billion.

Ahead of the print, Wedbush analyst Daniel Ives maintained an Outperform rating and $320 price target for Microsoft shares... Read More

From a technical analysis perspective, Microsoft’s stock looks set to rise over the coming days, but is due for a slight pullback. It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

Options traders, particularly those who are holding close dated calls or puts, take on extra risk because the intuitions writing the options increase premiums to account for implied volatility.

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The Microsoft Chart: Microsoft reversed course into an uptrend on Oct. 14 after printing a new 52-week low at $219.13. The stock’s most recent higher low was formed on Oct. 19 at $234.29 and the most recent confirmed higher high was printed at the $243.93 mark the day prior.

  • On Tuesday, Microsoft opened with an inside bar but broke up from Monday’s mother bar intraday. The stock was heading toward the 50-day simple moving average (SMA), and if Microsoft can regain the level as support it will indicate longer-term sentiment has turned bullish.
  • The rise higher was taking place on lower-than-average volume, which may cause some bullish traders to be concerned. Bulls want to see stocks move higher on higher-than-average volume to indicate a high degree of interest in the stock.
  • If Microsoft regains the 50-day SMA as support due to a positive reaction to its earnings print, a gap above that exists between $260.40 and $265.16 is likely to be filled. If that happens, Microsoft may find resistance at the top of the gap and retrace downward to print a higher low.
  • Bearish traders want to see Microsoft suffer a bearish reaction to its earnings print and fall under the $234 level, which would negate the downtrend.
  • Microsoft has resistance above at $256.84 and $263.19 and support below at $249 and $243.

See Also: Drip, Drip, Drip: It’s a Waiting Game as Investors Look for Direction from Microsoft and Alphabet After Close

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