Meta earnings look-ahead: Kicking off the 'year of efficiency'
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Meta Platforms (NASDAQ:META) enters Wednesday's earnings report (due after the closing bell) in not so different a position from its peers, including yesterday's report from Alphabet: Recovery from a rough 2022 is under way, but the business is far from what it used to be.
And the results will give investors their first look at Meta's "year of efficiency" -- the much-touted focus on tightening up the business, notably including reversing an aggressive hiring streak with pipelined cuts of more than 20,000 workers.
That potential margin effect will be weighted against a likely contraction in sales for the fourth straight quarter. Analyst expectations are for earnings per share of $1.95 (down 28.5% year-over-year) on revenues seen dipping 0.9%, to $27.7B.
Ad impressions should grow by double digits (about 13.8%), while average price per ads should fall by double digits (-14.3%).
Those Meta revenues are almost entirely advertising, with the company's "Reality Labs" unit expected to contribute just $613M in sales. Those sales, though, will likely get some outsize discussion with talk of artificial intelligence and the metaverse in the earnings air.
With AI ascendant (and Meta's early metaverse talk somewhat in the background), which of those future themes will get the most commentary from CEO Mark Zuckerberg? The earnings call should answer that question.
Observers also expect Facebook to report daily active users of 2.01B, and monthly active users of 3B. Looking out at the whole "family of apps" (including Instagram and WhatsApp), service users per day are estimated at 2.97B, and service users per month at 3.76B.
Seeking Alpha analysts think Meta Platforms is a Buy, a stance agreed to by Wall Street analysts. Seeking Alpha's Quant Ratings see Meta as a Hold.
Seeking Alpha analyst Cavenagh Research thinks the market is too pessimistic about Meta's earnings power, suggesting the company's margin-expanding discipline on operating expenditures will be met with an ad business that has "likely stabilized."
Seeking Alpha analyst (and Investing Groups leader) Joe Albano says Meta's earnings report is more about "solidifying its new course" not only by stopping its downtrend, but notably by focusing on innovation in its ad products instead of its user products, and finding a non-advertising product capable of generating revenue.