To The Moon

Financial Analysis: Strong Revenue and Profit Growth

In my view, META's Q3 2023 financial performance has been impressive, exceeding market expectations.

1.1. Revenue Growth: META reported a Q3 revenue of $341.5 billion, a 23% year-on-year increase, surpassing the expected $335.2 billion. This remarkable growth was primarily driven by its application family, including various mature apps, which significantly boosted user engagement and led to a substantial increase in advertising revenue.

1.2. Profit Improvement: META's net profit for Q3 reached $115.83 billion, a 164% year-on-year increase, with earnings per share at $4.39, marking a 168% growth. This improvement can be attributed to operational enhancements and cost control measures.

Operational Analysis: Continued Cost Reduction and Strong Application Family Growth

2.1. Cost Efficiency: META's cost control measures contributed to a gross profit margin of 81.8%. Operating costs and expenses decreased by 7.5% year-on-year, leading to a 143% year-on-year growth in operating profit, far exceeding analyst expectations.

2.2. Robust Application Family: The application family's revenue in Q3 was $339.4 billion, with a 24% year-on-year increase. The family's operating profit also surged by 87%, demonstrating the effectiveness of META's strategy.

2.3. User Engagement: The daily active users (DAU) for the application family reached 3.14 billion, showing a 7% year-on-year increase. This data underlines the strong user retention driven by AI features embedded in META's apps.

Reality Labs Performance

3.1. Declining Revenue: In contrast to the application family's success, META's "Reality Labs" division had a challenging quarter. Q3 revenue was $2.1 billion, a 26% year-on-year decrease, falling short of expectations.

3.2. Continued Loss: The division reported an operating loss of $3.74 billion in Q3, slightly better than expected but still a loss of approximately 5%.

META's Reality Labs has consistently underperformed, possibly due to lackluster product sales. However, recent product releases, such as Quest 3 and Ray-Ban smart glasses, show potential. The pricing of Quest 3 remains a key factor in determining its sales success.

Technical Analysis

META's stock price has seen significant fluctuations, but recent gains have brought it closer to historical highs. The overall financial recovery has provided support for the stock price. However, META's management rightly highlights the uncertainty of next year's performance due to its dependence on digital advertising and the macroeconomic environment.

Conclusion:

In summary, META's Q3 2023 performance has shown remarkable improvements, driven by strong revenue growth, cost efficiency, and a robust application family. However, the Reality Labs division continues to underperform. While the stock has witnessed a significant rebound, caution is advisable as uncertainties in next year's performance remain, as acknowledged by META's management.

@VideoLounge @Daily_Discussion @CaptainTiger @MaverickTiger @MillionaireTiger @TigerStars @Tiger_chat