Meta, formerly known as Facebook, has become a standout performer on Wall Street since early 2023, when CEO Mark Zuckerberg promised investors a “year of efficiency.” The company’s stock nearly tripled in value last year, second only to Nvidia among S&P 500 constituents, and has continued its upward trajectory with a 40% increase in 2024.
The company faced challenges in 2022, grappling with the impact of Apple’s iOS privacy update and broader economic uncertainties that prompted many advertisers to reduce their spending. In response, Zuckerberg led efforts to revitalize the advertising business with a focus on artificial intelligence. During the latest earnings call in February, Meta’s finance chief, Susan Li, highlighted investments in AI models capable of accurately predicting relevant ads for users, along with tools for automating the ad creation process.
Analysts anticipate Meta to report a 26% revenue increase from $28.65 billion the previous year, representing the fastest growth rate since the third quarter of 2021, before the effects of Apple’s privacy changes became apparent across other companies’ financials.
Meta is capitalizing on a more stable economic environment and increased spending from Chinese discount retailers such as Temu and Shein, which are directing funds towards Meta’s platforms, including Facebook and Instagram, to broaden their user reach. However, analysts at Baird cautioned in a recent note that a slowdown in spending from Chinese advertisers could pose a potential concern for Meta’s first-quarter results.
Baird analysts anticipate sustained momentum for Meta, citing its improving advertiser tools and successful monetization of short-form video content. They hold “reasonably high” expectations for the company’s performance.
Investor attention remains on Meta’s costs, which have been a focal point of the stock’s upward trajectory. In early 2023, Zuckerberg outlined plans to streamline operations, resulting in significant job cuts and a commitment to restrained hiring moving forward.
By December 31, Meta’s global workforce had decreased to 67,317 from a peak of over 87,000 in 2022, according to SEC filings.
Jefferies analysts recently expressed confidence in Meta’s performance, expecting it to surpass first-quarter expectations and provide upbeat guidance for the next quarter. The consensus among analysts points to a 20% revenue growth to $38.29 billion in the second quarter.
Despite ongoing losses in Meta’s Reality Labs unit, which focuses on metaverse development, analysts predict a 51% revenue increase to $512.5 million for the quarter, offset by an operating loss of $4.31 billion.
Meta executives are scheduled to discuss the company’s results with analysts at 5 p.m. ET.
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