Meta Platforms Q2 Earnings Surpass Expectations: Is the Stock a Buy?

Meta Platforms' Q2 advertising revenue rose 22% YoY, exceeding expectations. The company's Q3 revenue guidance is between $47.5 billion and $50 billion, indicating 20% growth at the midpoint. The stock rose 11% after Q2 earnings but trades at 28 times earnings, not the cheapest. Investors should consider the price and growth prospects before buying.

Meta Platforms (NASDAQ: META), the parent company of Facebook, Instagram, WhatsApp, and Messenger, reported a significant increase in advertising revenue during the second quarter of 2025. The company's advertising platform generated $46.6 billion in revenue, marking a 22% year-over-year (YoY) growth, which exceeded the company's expectations and those of Wall Street [1].

The strong performance was driven by robust user engagement and the effectiveness of Meta's advertising solutions. The company's overall revenue for Q2 2025 was $47.5 billion, with advertising revenue accounting for nearly 98% of the total. This high proportion underscores the critical role of advertising in Meta's financial performance [1].

Looking ahead to the third quarter, Meta provided revenue guidance that suggests continued growth. The company expects total revenues to be between $47.5 billion and $50 billion, indicating a midpoint growth rate of 20% compared to the same period last year. This guidance reflects the company's optimism about its ability to sustain the momentum seen in Q2 [1].

Following the release of Q2 earnings, Meta's stock price experienced an 11% increase on July 31, 2025. However, with the stock trading at 28 times earnings, it is not the cheapest option in the market. The S&P 500 index, for comparison, trades at 24.9 times trailing earnings, although still considered historically expensive [1].

Investors should consider the current price and the company's growth prospects before making a decision. While Meta's impressive growth rate and dominant business model suggest strong future performance, the stock's valuation may be a concern. Additionally, regulatory concerns and the potential for slower monetization of new platforms like Threads and Meta AI should be factored into investment decisions [2].

References:
[1] https://www.mitrade.com/insights/news/live-news/article-8-1020119-20250807
[2] https://www.nasdaq.com/articles/zacks-analyst-blog-highlights-meta-platforms-alphabet-amazon-and-snap