To The Moon

$Meta Platforms, Inc.(META)$ is expected to release earnings on 01 Feb 2024 after the market closes (AMC).

Analysts polled by FactSet expect earnings of $4.83 a share on sales of $39.1 billion. A rebound in advertising, the threat of regulation and the specter of AI are some of the things we might expect from Meta.

The contributors to revenue beat could be from twin revenue engines of ads and AI. This also come with challenges from aggressive federal regulatory climate that has the Federal Trade Commission looking at AI partnerships and investments - and another hearing on Capitol Hill. (Which is happening now).

Technical is showing Uptrend signal. And MACD have been showing a upwards move, though we are seeing a slide recently, but not to the point of a bearish crossover for concerns.

Meta Platforms (META) Last Reported Earnings

META last reported earnings on 25 Oct 2023. META shares declined -3.7% the day following the earnings announcement to close at 288.35. Following its earnings release, 99 days ago, META stock has drifted +35.3% higher.

From the time it announced earnings, META traded in a range between 292.97 and 406.36. The last price (390.14) is closer to the higher end of range.

Estimated implied straddle for upcoming earnings is 6.7%. We could be seeing a positive price effect this quarter earnings, based on increased ads and AI revenues, on top of cost saved from jobs cut.

Meta Platforms (META) Post Earnings Movement

The options market overestimated META stocks earnings move 50% of the time in the last 12 quarters. The predicted move after earnings announcement was ±7.1% on average vs an average of the actual earnings moves of 11.4% (in absolute terms).

This shows you that META tended to be more volatile than the options market predicted for the earnings stock price reaction.

We are seeing Meta implied move at 7.10% much lower than the average of actual move over 12 quarters at 11.40%, we could be seeing implied volatility lower. This could give Meta a potential of an upside at at least 7% if both revenue and EPS beat estimates.

Meta Platforms (META) Earnings Implied Volatility Crush

META's last earnings implied volatility (IV30) going into earnings was 53.2. The last time META released earnings, the implied volatility dropped to 37.5, resulting in an implied vol crush of 29%. 5 days after earnings, the 30 day IV was 30.8.

• Average Implied Volatility Crush For META Earnings: 24%

• Average 30 Day Implied Volatility 1 Day Before Earnings: 51.2

• Average META 30 Day IV for the Day of Earnings: 38.1

• Average 30 Day Implied Volatility 5 Days After Earnings: 36.3

Meta Platforms (META) Post Earnings Announcement Drift

META share price has drifted up 35.3% post earnings announcement. Using the last 12 quarters data, the average drift between earnings announcements is 4.3%. The current drift represents a positive 1.6 standard deviation move.

• Current post earnings announcement drift: 35.3%

• Historical average post earnings announcement drift: 4.3%

• Historical post earnings drift standard deviation move: ±22.6%

Summary

Meta could be releasing some positive revenue gains from its ads and AI, there should be more demand for their services given that subscribers have shifted to this platforms.

But we should still be cautious of how Meta other business segment might suffer due to their CEO trying to restart metaverse. And how have their purchase of chips working for their AI?

Appreciate if you could share your thoughts in the comment section whether you think Meta could give surprise in their revenue from ads and AI.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.