Meta Earnings, more ‘Meh’ or ‘Ta-da’?
Meta Platforms, Inc. $Meta Platforms, Inc.(FB)$ reports Q1 2022 earnings after market close on Wed April 27. Analysts estimate earnings of $2.56 a share, down from $3.30 a year ago, but revenue is expected to top $28.3 billion, up from $26.2 billion a year ago. For many companies, such numbers would be exceptional, but for Meta it’s ‘Meh’ – unimpressive, as it’s used to reporting much higher returns. The outlook for Meta is even more ‘Meh’ – uninspiring due to quadruple whammy to its Family of Apps revenue streams: 1. ad targeting restrictions of consumers on smartphones, particularly Apple iOS, 2. losing younger users to TikTok 3. high-inflation induced budget cuts by global advertisers and 4. ban in Russia, exacerbated by softer ad demand across Europe.
Meta’s Family of Apps still generates almost all of its revenue
Meta Developments
To Meta’s credit, it has tried some ‘Ta-da’ – announcing a few (supposedly) impressive developments to excite users and investors. These include 1. ‘Zuck’ Bucks digital currency for transactions in the Metaverse and Facebook, Messenger, Instagram and WhatsApp, 2. ‘creator bonus’ program to support development of virtual worlds in its Horizon Worlds VR platform, and 3. opening a mega Meta physical store (1,550-sq ft) as it bet big on its Reality Labs segment. Come May 9, consumers can try and buy Quest 2 VR headset and video calling device Portal. A further smart glass collaboration with Ray-Ban is set for release later. However, the reception to these developments has been rather ‘Meh’– unexcited and apathetic, and did little to stimulate its stock price upwards!
Mark Zuckerberg demoed the Metaverse. Credits: Meta
Meta Price Action
From the Daily chart below, $Meta Platforms, Inc.(FB)$ stock price has struggled to recover from its –26%, biggest ever, plunge in Feb, after forecasting weaker than expected growth. It closed Tue Apr 26 session at $180.95. This $180–level is critical, being a strong support for at least five instances (blue up arrows) in the past.
If Meta’s earnings and outlook turn out ‘Meh’ – unimpressive and uninspiring, price might either consolidate around $180 (scenario 2 in chart) or drop further to around $150 (scenario 1), level not seen since Mar 2020 and Jan 2019.
On the other hand, if Meta pulls off a ‘Ta-da’ – exceedingly impressive earnings and outlook, price might have upside surprise to around $228 level (scenario 3 in chart). This level has been support-turned-resistance for at least four occasions (blue up, red down arrows), but not surprising as it corresponds to the 0.236 Fib level as well.
META Daily Chart
Meta ‘Meh’ or ‘Tada’?
So, will Meta’s earnings turn out ‘meh’ or ‘ta-da’? I await with bated breath, and trade according to scenarios 1 to 3 mapped out above!
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Well there are not 1 but 3 'ta-das' - impressive annoucements [龇牙]
Earnings per share BEAT: $2.72 actual vs $2.56 expected
Daily Active Users (DAUs) BEAT: 1.96 billion vs 1.95 billion
Average Revenue per User (ARPU) BEAT : $9.54 vs. $9.50
Other metrics and Q2 outlook remained soft but those were enough to cause "pop" after hours to ard $204 (+16%). Next target $209 (MA) before scenario 3 target in med term [梭哈]
enough said.
don't look at short term gain or loss
Fighting
Good read!
Also think chances for a Meh earnings report are higher than a ta-da yay report for $Meta Platforms, Inc.(FB)$ but then, sometimes we get surprised [Surprised]