Meta Stock Surges Over 10% On Earnings and Revenue Beat
27 Abril 2023 - 7:50AM
Finscreener.org
Shares of social-media
giant Meta Platforms (NASDAQ:
META) are up over 10% in pre-market trading today
after the company announced Q1 results on April 26.
In the quarter that ended in
March, Meta reported:
- Earnings of $2.20 per share, compared to
estimates of $2.03 per share
- Revenue of $28.65 billion, compared to estimates
of $27.65 billion
- Daily active users or DAUs of 2.04 billion vs.
estimates of 2.01 billion
- Monthly active users of 2.99 billion, which were
in line with estimates
- Average revenue per user of $9.62 vs. estimates
of $9.30.
Meta’s sales were up 3% year over
year in Q1, after three consecutive quarters of revenue decline. It
now forecasts sales between $29.5 billion and $32 billion in Q2,
which were also above estimates of $29.5 billion.
Let’s see what impacted Meta’s
performance in the quarter and if the stock can continue to surge
higher in 2023.
Meta stock is up 74% in 2023
Due to an impressive rally in
tech stocks, Meta stock has now surged close to 80% year-to-date.
However, itU+02019s still trading 40% below all-time highs and is
valued at a market cap of $536 billion.
In a company statement, Meta CEO,
Mark Zuckerberg stated, “We had a good quarter and our community
continues to grow. The company is becoming more
efficient so we can build better products faster and put ourselves
in a stronger position to deliver our long term vision.”
However, Meta’s net income was
down 24% year over year at $5.71 billion, compared to the net
income of $7.47 billion in the year-ago period.
Its Reality Labs division which
is involved in the development of augmented reality and virtual
reality products reported sales of $399 million, but its operating
loss stood at $3.99 billion. In Q4, the losses for this division
stood at $4.28 billion, on sales of $727 million. Moreover, sales
and operating losses stood at $2.16 billion and $13.7 billion
respectively in 2022.
Meta had earlier defined 2023 as
the year of efficiency, resulting in company-wide layoffs and a
lower cost base. It forecasts expenses to range between $86 billion
and $90 billion in 2023, including restructuring costs of
approximately $4 billion. Additionally, Meta will allocate between
$30 billion and $33 billion towards capital expenditures, a
majority of which will be allocated and deployed to expand
capabilities in high-growth verticals such as artificial
intelligence.
Meta has laid off 21,000
employees due to a slowdown in revenue growth and an erosion of
profit margins driven by various factors. This includes inflation,
interest rate hikes, lower enterprise spending, the iOS privacy
update, and competition from TikTok.
What next for Meta stock price and
investors?
Analysts tracking Meta stock
expect it to increase sales by 4.8% to $122 billion in 2023 and by
11.3% to $136 billion in 2024. Comparatively, adjusted earnings are
forecast to widen from $8.59 per share in 2022 to $9.96 per share
in 2023 and $12.44 per share in 2024.
So, META stock is priced at 4.4
times forward sales and 21x forward earnings, which is quite
reasonable for a tech stock.
There are several reasons for
Meta stock to move lower in the upcoming months, especially if
market sentiment turns bearish. But the company’s huge size, its
vast user base, and investments in high-growth segments make it a
top bet at the current valuation.
Wall Street remains bullish on
Meta stock, with more than 60% of analysts covering the company
recommending a “buy.”
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