Meta Q1 results: Will it lead to rally?

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Meta Q1FY23 Earnings

Meta (Facebook) share prices soared about 11% in after market trading on April 26th 2023 after the social media firm reported robust earnings for the quarter ended March 2023, helped by higher ad sales on account of strong active user growth at Facebook and Instagram.

For a detailed view on Meta shares and its key business attributes, click here.

The recent jump in the company’s share price, resulted in an increase of more than $50 billion in its market capitalization. 

With Meta’s results, the majority of technology shares earnings are in the rear view with only Amazon left to report quarterly earnings. Alphabet, Microsoft, Tesla and Netflix all reported strong results and beat analysts’ revenue and profit expectations.  

Meta shares also received a jolt after the company revised its cost forecast for the year and stated that expenses might be lower for the upcoming quarters. 

Moreover, Meta exceeded expectations for Q1 revenue and profit, which saw a rise for the first time in almost a year. 

Meta Q1 Results: Key Highlights

  • Daily Active Users for all of Meta owned apps (Facebook, Instagram, Messenger, Whatsapp) rose 5% year-on-year to 3.02 billion for the quarter ended March, 2023.
  • Facebook alone contributed 2 billion daily users to a total of 3 billion users 
  • The average price per ad decreased by 17% year-over-year
  • Meta reported revenue of $28.6 billion, a 3% gain from the previous year.
  • Total costs and expenses were $21.42 billion, an increase of 10% year-over-year
  •  Headcount was 77,114 as of March 31, 2023, a decrease of 1% year-over-year, on account of the layoffs announced in November last year.

Meta: Historical Share Price Performance

Meta Q1 Results: Revenue

Meta's revenue gained 3% primarily on account of higher ad sales in Facebook amid a steady rise in daly active users. However, the revenue growth was muted as the quarterly price per ad decreased 17% from a year earlier. Expectations for Q2 revenue is between $29.5 billion and $32 billion, compared with analysts' estimates of $29.53 billion.

 Q1FY23Q1FY22% change
Total Revenue$28.6 billion$27.9 billion+3%

Meta Q1 Results: Net Profit

Meta's net profit slid 24%, but it beat analyst expectations pushing its share prices higher. The company's rising costs of $21 billion compared to the $19 billion expenses made in the corresponding quarter last year weighed on earnings. 

 Q1FY23Q1FY22% change
Net Profit       $5.7 billion$7.5 billion-24%

Meta Q1 Results: Daily Active Users

 Q1FY23Q1FY22% change
DAU               3.02 billion2.87 billion+5%

Meta Q1 Results: Analyst View

  • Renowned brokerage Morgan Stanley has a 'buy' rating on the firm and a share price target of $300
  • Brokerage Bank of America has a ‘buy’ rating on the firm and a share price target of $300.
  • Jefferies has a ‘buy’ rating on the firm and a share price target of $280.
  • Guggenheim has a ‘buy’ rating on the firm and a share price target of $320.

This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.