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TMN - Meta

Meta stocks skyrocket following Q1 earnings beat

Shares of Meta Platforms significantly surged on Wednesday after hours after the company posted earnings that surpassed market estimates.

The Facebook parent jumped 18.37% or 32.14 points to $207.09 per share. The stock reversed a decline of 3.32% or 6.00 points to $174.95 per share in the regular trading session. Then, the notable upturn sent an additional $87.11 billion to the firm’s market valuation.

Accordingly, the social media giant reported earnings of $2.72 per share, exceeding the analysts’ consensus of  $2.56.

In addition to the earnings figure, Meta also topped expectations for average revenue per user. The ARPU posted at $9.54, compared to the $9.50 expected.

However, almost every other key metric was a miss, including monthly active users. Subsequently, MAUs came in at 2.94 billion, lower than the average market estimate of 2.97 billion.

Meanwhile, daily active users, a key metric for advertisers, were 1.96 billion in the quarter. It is slightly higher than the 1.95 billion forecasted.

Then, revenue rose 7.00% year-over-year to $27.91 billion, still down from the projected $28.20 billion. Remarkably, it is the first time in Facebook’s 10-year history as a public company that growth was in the single digits.

For the second quarter, Facebook anticipated revenue of $28.00 billion to $30.00 billion. This outlook trailed the analyst’s $30.60 billion.

The firm explained that the guidance considers continued macroeconomic trends from the first quarter. This dampened view includes soft profit due to the impact of the war in Ukraine.

Last month, Russia blocked Facebook and Instagram, concluding Meta was guilty of extremist activity amid Moscow’s crackdown on social media. Correspondingly, the tech giant has also barred advertisers in the Kremlin from creating and running ads across the globe.

Meta’s Reality Lab lost $2.96 billion

Furthermore, Meta announced a first-quarter loss of $2.96 billion in its recently created Facebook Reality Labs (FRL) division. It went beyond the prior loss of $1.83 billion in the first quarter of 2021.

Subsequently, the segment includes its augmented and virtual reality operations, an attempt to build products for the metaverse.

Meta also anticipates facing a more challenging regulatory environment moving forward with Europe. Eventually, lawmakers already agreed on the Digital Markets Act. The legislation aims to rein in the power of digital gatekeepers.

Meta updated investors for the first time since a harsh fourth-quarter earnings report in February. The previous downbeat result sent the stock down 26.00%, its worst day ever.

The post-trading rally still leaves the stock way down for the year. As of the close, the shares had lost 48.32% in 2022. Nevertheless, if the stock continues its upward trend today, it would post its biggest gain since July 2013.

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