Earnings Preview: Will META Live Up to the Hype?
AInvestThursday, Feb 1, 2024 3:38 pm ET
1min read
META --
META --

As Meta Platforms prepares to unveil its Q4 results in an eagerly anticipated conference call at 4:30 p.m. ET, the spotlight is on estimates of $4.82 EPS and $39.1 billion in revenue. An inline quarter would signify a remarkable 61% YoY EPS growth and a substantial 22% YoY revenue surge.

Despite the upside in Q3 results, Meta issued Q4 revenue guidance of $36.5-$40.0 billion, citing a brief ad spend slowdown linked to the Middle East conflict in October. Alphabet's Q4 results, revealing robust revenue growth of 11%, suggest this slowdown may have been transitory, driven by advertising resilience.

In the upcoming earnings release, investors anticipate Q1 revenue guidance, total expenses, and FY24 capital expenditures projections. To meet expectations, Meta needs to guide for Q1 revenue of $33.9 billion, reflecting an 18.5% YoY growth.

The FY24 expense and capex outlook will be closely scrutinized. Last quarter, Meta projected total expenses of $94-$99 billion and capex of $30-$35 billion for FY24. If these figures grow at 16% and 10% YoY, respectively, investors may respond dynamically to these forecasts.

AI Capabilities and Focus Areas

Meta's emphasis on AI capabilities, elevating ad targeting and ROI, is noteworthy. AI-driven feed recommendations have amplified user engagement on Facebook and Instagram by 7% and 6%, respectively, this year.

The growth trajectory of short-format video app Reels is a key focal point. With Meta estimating Reels as net neutral to overall company ad revenue, its performance will be closely monitored.

Strong Stock Performance and Expectations

With a robust stock performance, witnessing a nearly 25% rise since early December, Meta Platforms faces high expectations in maintaining this momentum during the Q4 earnings report.

Conclusion

As the parent company of prominent social media platforms, Meta Platforms Inc. (META) navigates a landscape of high expectations. Rated as a Strong Buy by 42 Wall Street analysts, Meta's forward P/E ratio of 22.62 positions it as a significant player. Investors and traders awaiting the Q4 results should focus on revenue guidance, expense, capex projections, and AI-driven growth strategies for well-informed financial decisions in this dynamic market environment.

$META(META)

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