Topline
Meta shares rallied Wednesday after delivering another quarterly earnings report that topped Wall Street’s expectations, extending the sizzling stock’s winning streak as the company leaves its metaverse slipup in the rearview mirror.
Meta CEO Mark Zuckerberg helped lead his company to its most profitable quarter in nearly two years … [+]
Key Facts
Meta reported $32 billion of sales and $2.98 earnings per share, beating consensus analyst estimates of $31.1 billion of revenue and $2.91 earnings per share, according to FactSet.
That marks Meta’s most profitable quarter since 2021, when the company changed its name from Facebook to reflect its newfound commitment to augmented and virtual reality, or the metaverse.
In its earning release, Meta projected sales during the current quarter to come in between $32 billion and $34.5 billion — smashing consensus estimates of $31.1 billion
Meta’s $31.5 billion in advertising revenue last quarter exceeded estimates of $30.4 billion and marked a 12% year-over-year increase.
Losses in its metaverse division moderated from $4 billion to $3.7 billion, still far above estimates of $3.4 billion; the segment has lost about $25 billion in its 1.5 years of existence while Meta’s bread-and-butter social media business raked in more than $80 billion of operating income.
Shares of Meta soared more than 6% in after-hours trading, adding on its more than 200% rally since last fall.
Key Background
Meta’s $7.8 billion of net income last quarter was its best in more than a year, but profits are still down roughly 25% compared to the second quarter of 2021. Shares of the Bay Area social media titan crashed more than 75% in the year ending September 2022 as investors digested sliding profits and mounting metaverse losses. But Meta has since staged a dramatic comeback, as the stock is up more than 200% over the last eight months, though its share price is still about 20% off of its all-time high. Meta CEO and cofounder Mark Zuckerberg has grown more than $60 billion richer this year, according to Forbes’ calculations. Zuckerberg dubbed 2023 Meta’s “year of efficiency” in a March blog post thanks to its extensive cost-cutting measures which include a 25% reduction to the size of its workforce following about 20,000 layoffs.
Surprising Fact
Meta shares notched double-digit gains in the trading sessions immediately after the release of its prior two earnings reports, racking up two of the 10 largest gains in Meta stock’s 11-year history.
Tangent
Earlier this month, Meta launched Threads, a text-based Instagram offshoot designed to directly compete with Twitter. Though the company has yet to monetize the platform, several analysts believe it can be a part of Meta’s growth story and drive the stock up further.
Further Reading
Meta Stock Surge Adds $60 Billion After Threads Launch—And One Analyst Predicts Potential $1 Trillion Valuation (Forbes)
Threads’ User Engagement Plummets After Explosive Start (Forbes)
Meta Stock Surges To 14-Month High After Earnings Beat—Even As It Bleeds Billions Of Dollars In The Metaverse (Forbes)
Source: https://www.forbes.com/sites/dereksaul/2023/07/26/meta-earnings-stock-rallies-as-facebook-parent-notches-most-profitable-quarter-since-2021/