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Meta Platforms (META), the parent company of Facebook, Instagram, WhatsApp, Oculus, Threads and other brands, is scheduled to report third quarter results after market close on Wednesday, October 25 with a conference call scheduled for 5 pm ET. Here’s what to watch for:
EXPECTATIONS: Last quarter, Meta Platforms reported earnings of $2.98 per share on revenue of $31.99B.Mark Zuckerberg, Meta founder and CEO, said at the time: “We had a good quarter. We continue to see strong engagement across our apps and we have the most exciting roadmap I’ve seen in a while with Llama 2, Threads, Reels, new AI products in the pipeline, and the launch of Quest 3 this fall.”The company said at that time that it expected third quarter revenue to be in a range of 32B-$34.5B, versus the then-current consensus of $31.18B.Meta added: “We anticipate our full-year 2023 total expenses will be in the range of $88-$91B, increased from our prior range of $86-$90B due to legal-related expenses recorded in the second quarter of 2023. This outlook includes approximately $4B of restructuring costs related to facilities consolidation charges and severance and other personnel costs. We expect Reality Labs operating losses to increase year-over-year in 2023. While we are not providing a quantitative outlook beyond 2023 at this point, we expect a few factors to be drivers of total expense growth in 2024 as we continue to invest in our most compelling opportunities, including artificial intelligence and the metaverse… Looking ahead, while we will continue to refine our plans as we progress throughout this year, we currently expect total capital expenditures to grow in 2024, driven by our investments across both data centers and servers, particularly in support of our AI work.”Current consensus EPS and revenue forecasts for Meta’s September-end quarter stand at $3.70 and $33.52B, respectively, according to data from Bloomberg. The consensus EPS and revenue forecasts for Meta’s December-end quarter reported by Bloomberg stand at $4.96 and $38.76B, respectively.
UPGRADES AFTER Q2: Following the company’s Q2 report, HSBC analyst Nicolas Cote-Colisson upgraded Meta Platforms to Hold from Reduce with a price target of $285, up from $170. The company’s Q2 revenue was strong and the second half of 2023 is “looking good too,” the analyst told investors. The firm said the macro headwind it expected were not materializing, causing a significant reset to its advertising revenue forecasts. Both the economy and Meta’s business model “are more resilient than we were anticipating,” added HSBC.Meanwhile, Wells Fargo upgraded Meta Platforms to Overweight from Equal Weight with a price target of $389, up from $313. The analyst cited accelerating tailwinds and “de-risked” 2024 guidance for the upgrade following the Q2 results. The company’s “blowout” Q3 revenue guidance appears sustainable, the analyst told investors, adding that upside artificial intelligence “call options” are emerging for Meta.More recently, Wells Fargo lowered the firm’s price target on Meta Platforms to $372 from $389 and kept an Overweight rating on the shares in a preview note published on October 9. The firm expects Q3 revenues near the high-end of guidance and modest revenue acceleration into Q4. Wells also sees initial guidance of $95B-$100B for FY24 OpEx, but expects below $95B for actual.In its own preview published on October 13, Mizuho said it is positive on Meta Platforms into the earnings print, saying agency checks indicate the company’s advertising revenue growth is tracking ahead of consensus. The firm also expects further operating leverage from Meta’s increased efficiency. With an estimated exit rate of 20%-plus revenue growth, the consensus fiscal 2024 growth of 13% is conservative with positive leading indicators from improved pricing, the analyst told investors. Mizuho says that while investors are concerned Meta’s 2024 opex guidance could be elevated at 20% year-over-year growth, it believes the probability is low given the narrow product roadmap of metaverse and headcount not likely to accelerate meaningfully. The firm likes the stock’s risk/reward heading into the print and keeps a Buy rating on Meta with a $400 price target.Earlier this week, Stifel raised the firm’s price target on Meta Platforms to $402 from $385 and kept a Buy rating on the shares. Ahead of earnings for the digital advertising group, the firm said its digital ads checks were “largely positive overall,” with growth that is pacing inline to ahead of internal plans as exiting the year. The firm has slightly adjusted its models, noting that some of its adjustments are based on the timing of key launches.
AGS FILE SUIT: On October 24, California Attorney General Rob Bonta announced that he co-led a bipartisan coalition of 33 attorneys general in filing a federal lawsuit against Meta Platforms. Filed in the U.S. District Court for the Northern District of California, the lawsuit alleges that Meta “designed and deployed harmful features on Instagram and Facebook that addict children and teens to their mental and physical detriment.” The attorneys general are seeking injunctive and monetary relief. As part of this coordinated effort, eight attorneys general announced filing lawsuits against Meta today in their respective state courts. The federal and state complaints are the result of a nationwide investigation that Attorney General Bonta announced on November 18, 2021, Attorney General Bonta said.More By This Author:What Wall Street Is Saying About Alphabet Ahead Of Earnings
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