While investors were worried about the economic weakness in North America and Europe, it appeared this was offset by the strength in other geographic markets. Meta Platforms achieved a decent +3% YoY constant-currency revenue growth in the second quarter of this year, after excluding the effects of negative foreign exchange fluctuations such as the USD strength relative to the EUR. The first key metric for META is revenue growth adjusted for foreign exchange effects. Prior to analyzing Meta Platforms' stock price weakness and seeking out potential catalysts for the company's shares, it is relevant to first highlight a few key Q2 2022 metrics for META. Looking beyond META's current price weakness in 2022 year-to-date, I think there are catalysts for Meta Platforms that could spark a substantial recovery in the company's stock price next year. My favorable view of META remains intact, and this explains why I have kept my Buy rating for Meta Platforms unchanged. I previously touched on the tech sell off and its impact on META in my earlier article written on June 22, 2022. Share PriceĪdani Ports & Special Economic Zone.I reiterate my Buy investment rating for Meta Platforms, Inc.'s ( NASDAQ: META) stock with this latest article focusing on potential re-rating catalysts that could materialize in 2023. Net income in the third quarter fell to $4.40 billion, or $1.64 per share, from $9.19 billion, or $3.22 per share, a year earlier, its worst showing since 2019 and the fourth straight quarter of profit decline.Īnalysts had expected a profit of $1.86 per share. "Given revenues were down at a time when costs have grown significantly, modest user growth and impressions simply isn't going to bail you out." "The worry for Meta is that this pain is likely to continue into 2023 as cost headwinds remain a real challenge and the strong dollar impacts on overseas earnings," said Ben Barringer, equity research analyst at Quilter Cheviot. Meta also posted user growth figures roughly in line with expectations, including a year-over-year increase of monthly active users on flagship app Facebook. He believes Reels is gaining against rival TikTok, he added, with Reels being reshared more than 1 billion times a day. Zuckerberg said plays of Meta's TikTok-like short-video product Reels now number more than 140 billion across Facebook and Instagram each day, up 50% from six months ago, and its revenue run rates are now $3 billion annually. "And I think that those who are patient and invest with us will end up being rewarded." Zuckerberg added that he expected the metaverse work to provide returns over time. Meta executives defended the spending, saying most of the company's expenses were still going toward the core business, including investments in more expensive AI-related servers, infrastructure and data centers. In the meantime, he has had to freeze hiring, shutter projects and reorganize teams to trim costs.Īn analyst on the investor call told Zuckerberg investors were worried that the company had taken on "just too many experimental bets" and asked the chief executive why he believed his gambles would pay off. Meta is carrying out several overhauls of its apps and ads products to keep its core business pumping out profits, while also investing $10 billion a year in a bet on metaverse hardware and software.Ĭhief Executive Mark Zuckerberg has said he expects the metaverse investments to take about a decade to bear fruit. Total costs for the third quarter came in above estimates at $22.1 billion, compared with $18.6 billion the year prior. It also forecast that operating losses associated with the Reality Labs unit responsible for its metaverse investments would grow in 2023 and pledged to "pace" investments after that. That includes an estimated $2.9 billion in charges over the course of both 20 from the office downsizing. Meta also forecast that its full-year 2023 total expenses would be $96 billion to $101 billion, significantly higher than a revised estimate for 2022 total expenses of $85 billion to $87 billion. More troubling was the company's estimate that fourth-quarter revenue would be in the range of $30 billion to $32.5 billion, mostly under analysts' estimates of $32.2 billion, according to the Refinitiv data.
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