Meta Platforms Earnings: META stock falls after missing revenue growth on advertising slowdown
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UPGRADE- Meta Platforms announced earnings after the close on Wednesday.
- META stock held u,p perhaps helped by bullish and doveish Fed comments.
- META stock sinks to its first-ever revenue slowdown since IPO.
Meta Platforms (META) stock held up reasonably well from what was not a good read on its earnings. The company slumped to its first-ever post-IPO revenue contraction and saw advertising spending slow. This trend has already seen SNAP revenues fall and the stock price collapse, while Google also saw an ad slowdown but managed to persevere with other sectors to soothe earnings and investor fears. No such luck for Meta, and The Zuck was notably downbeat on the earnings call.
Meta Platforms stock news
Earnings per share came in at $2.46 versus the $2.55 estimate. Meanwhile, revenue slowed to $28.82 billion, missing forecasts only slightly. The outlook was also lowered. Meta said the next quarter's revenue range is expected at $26 to $28.5 billion when analysts had been looking for $30.5 billion. Daily active users (DAU) and monthly active users (MAU) were both marginally ahead of forecasts, but on the conference call CEO Mark Zuckerberg said, "We seem to have entered an economic downturn that will have a broad impact on the digital advertising business. And it's always hard to predict how deep or how long these cycles will be, but I'd say that the situation seems worse than it did a quarter ago."
Zuckerberg said Meta was cutting back on some investment to reduce expenses. "We're slowing these investments and pushing some expenses...many teams are going to shrink." He did not strike a confident tone.
Also read: Meta Platforms (META) Stock Deep Dive: Facebook parent price target at $200 despite macro headwinds
In our deep dive, we alluded to the challenging environment and that we expected margins and revenue to decline. "We feel current projections are too high and that Meta Platforms will suffer both in terms of revenue and margins...Overall, even a modest move to 15 for the price/earnings ratio gives us an average price target of $159 to $179".
We remain reasonably confident in our assumptions as we had already tweaked margins and projected revenues lower. These earnings actually could see them lowered further, but the expected lowering of expenses and staff numbers should offset this.
Meta Platforms stock forecast
Meta Platforms is nearly back to its pandemic low, but we still have divergences from the Relative Strength Index (RSI) and Money Flow Index (MFI). These are bullish divergences to be sure. Key support remains at $137. This is probably too tempting to test, but on our 12-month time horizon we are comfortable with the $200 price target from our deep dive.
META chart, weekly
- Meta Platforms announced earnings after the close on Wednesday.
- META stock held u,p perhaps helped by bullish and doveish Fed comments.
- META stock sinks to its first-ever revenue slowdown since IPO.
Meta Platforms (META) stock held up reasonably well from what was not a good read on its earnings. The company slumped to its first-ever post-IPO revenue contraction and saw advertising spending slow. This trend has already seen SNAP revenues fall and the stock price collapse, while Google also saw an ad slowdown but managed to persevere with other sectors to soothe earnings and investor fears. No such luck for Meta, and The Zuck was notably downbeat on the earnings call.
Meta Platforms stock news
Earnings per share came in at $2.46 versus the $2.55 estimate. Meanwhile, revenue slowed to $28.82 billion, missing forecasts only slightly. The outlook was also lowered. Meta said the next quarter's revenue range is expected at $26 to $28.5 billion when analysts had been looking for $30.5 billion. Daily active users (DAU) and monthly active users (MAU) were both marginally ahead of forecasts, but on the conference call CEO Mark Zuckerberg said, "We seem to have entered an economic downturn that will have a broad impact on the digital advertising business. And it's always hard to predict how deep or how long these cycles will be, but I'd say that the situation seems worse than it did a quarter ago."
Zuckerberg said Meta was cutting back on some investment to reduce expenses. "We're slowing these investments and pushing some expenses...many teams are going to shrink." He did not strike a confident tone.
Also read: Meta Platforms (META) Stock Deep Dive: Facebook parent price target at $200 despite macro headwinds
In our deep dive, we alluded to the challenging environment and that we expected margins and revenue to decline. "We feel current projections are too high and that Meta Platforms will suffer both in terms of revenue and margins...Overall, even a modest move to 15 for the price/earnings ratio gives us an average price target of $159 to $179".
We remain reasonably confident in our assumptions as we had already tweaked margins and projected revenues lower. These earnings actually could see them lowered further, but the expected lowering of expenses and staff numbers should offset this.
Meta Platforms stock forecast
Meta Platforms is nearly back to its pandemic low, but we still have divergences from the Relative Strength Index (RSI) and Money Flow Index (MFI). These are bullish divergences to be sure. Key support remains at $137. This is probably too tempting to test, but on our 12-month time horizon we are comfortable with the $200 price target from our deep dive.
META chart, weekly
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