Meta Platforms (NASDAQ:META)
Meta Platforms (NASDAQ:META) is in a similar situation to its competitors, notably Alphabet, as they all head into Wednesday’s earnings report (expected after the closing bell): The company has begun to recover from a disastrous 2022, but it is still a long cry from its former self. As a result, Meta stock surged.
Investors will get their first peek at the fruits of Meta’s “year of efficiency” — the company’s much-touted effort to streamline operations, including reversing an aggressive hiring streak with planned cutbacks of over 20,000 employees.
Weighing against that profit impact is the likelihood of declining revenues for the fourth consecutive quarter. Revenues are expected to drop 0.9% to $27.7B, while EPS is predicted to drop to $1.95 (down 28.5% year-over-year).
We anticipate double-digit growth in ad impressions (about 13.8%) and a double-digit decline in average price per ad (around 14.3%).
Advertising makes up most of Meta’s earnings, with the “Reality Labs” division contributing an estimated $613M in sales. However, with talk of AI and the metaverse permeating the earnings air, such sales will surely get disproportionate attention.
Now that artificial intelligence is taking center stage (and early discussions of the metaverse are receding into the background), which topics do you think Facebook CEO Mark Zuckerberg will focus on the most? This should be clarified on the earnings call.
Observers anticipate that Facebook will disclose a daily active user count of 2.01 billion and a monthly active user count of 3 billion. It is projected that there are 2.97 billion daily users and 3.76 billion monthly users throughout the whole “family of apps” (which includes Instagram and WhatsApp).
Seeking Alpha and Wall Street, experts agree that Meta Platforms is a Buy. Quant Ratings at Seeking Alpha recommends keeping your Meta stock.
Cavenagh Research, a Seeking Alpha analyst, believes the market is excessively gloomy about Meta’s profits potential and that the firm’s margin-expanding restraint on operational costs will be matched with an ad business that has “likely stabilized.”
Joe Albano, leader of Seeking Alpha’s Investing Groups, argues that Meta’s earnings report is less about reversing the company’s downward trend and more about “solidifying its new course” by shifting resources to innovate the company’s advertising products rather than its user products and discovering a new revenue stream unrelated to advertising.
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