Will Meta Platforms Rise After Earnings Report?
πππ$Meta Platforms, Inc.(META)$
Google fell because investors maybe concerned that tech companies may be spending too much on AI even though it had better than expected earnings. Tesla slumped because it reported a 45% drop in Q2 profits with net income falling to USD 1.47 billion.
Meta Platforms also dropped 4.9% in the past 5 days too. However it is still up 34% year todate and in 2023, Meta has risen 46%. In fact Meta is the 2nd best performing stock in the Magnificent 7 after Nvidia. It has also reached USD 1 Trillion in market capitalisation in 2024.
Wall Street Analysts expect an Earnings Per Share of USD 4.70 and a revenue of USD 38.29 billion.
In the previous quarter, Meta warned that total expenses in 2024 could be between USD 96 billion and USD 99 billion. This is more than previously expected owing to higher legal and infrastructure investment to support the ramping up of AI. I will be eager to find out if there are any further increases to expense projections and the impact of AI integration.
CEO Mark Zuckerberg has emphasised that AI integration in its products contributed to strong Q1 24 results. Investors will be keen to know how this could continue to improve its user engagement.
Another key area would be Meta's advertising performance. Advertising revenues increased by a solid 27% in Q1 24 and investors will hope for a similar performance in Q2.
In Q1 24, Meta spooked investors with its tepid guidance. Consensus estimates call for a 14.7% rise in Meta's Q3 revenues while growth is expected to further taper down to 12.6% in Q4 24.
Last week Meta released its Llama 3.1 405B in which Mark Zuckerberg called it the first frontier level open source AI model. Investors will be keen to find out more details of this latest innovation and the timeline for its monetisation.
Wall Street Analysts are bullish on Meta with a Buy rating, Target price of USD 538.76, an upside potential of 15%.
Meta Platforms owns 4 of the biggest social media platforms, all with more than 1 billion monthly active users each - Facebook, WhatsApp, Facebook Messenger and Instagram. Facebook is the largest social network site with over 3 billion people using it monthly according to Statista. This means that 37% of the world's population are Facebook users.
I am bullish in Meta Platforms going forward even though its share price may face volatility in the short term. While I cannot say for sure whether it will rise after its forthcoming earnings report, I know Meta Platforms will continue to grow exponentially in the future due to its dominant position in social media and digital advertising.
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