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Meta expects total revenues between $26 billion and $28.5 billion for the first quarter of 2023. Unfavorable forex is expected to hurt year-over-year top-line growth by 2%.
The Zacks Consensus Estimate for first-quarter revenues is pegged at $27.49 billion, indicating a decrease of 1.51% from the year-ago quarter’s reported figure.
The consensus mark for earnings stands at $1.96 per share, down by a cent over the past 30 days, suggesting a decline of 27.94% from the figure reported in the year-ago quarter.
Meta’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, the average surprise being 8.56%.
Let’s see how things have shaped up for the upcoming announcement.
Factors to Note
Meta’s first-quarter top line is expected to have been affected by a challenging macroeconomic environment, high inflation, and rising interest rates hurting the ad spending budgets of enterprises. This is expected to have weighed on ad revenues in the to-be-reported quarter.
The company’s ad revenue business is facing a decline in growth due to ad targeting-related headwinds created by Apple’s (AAPL - Free Report) iOS changes.
Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. However, measuring these outcomes is tough.
In the fourth quarter of 2022, Meta’s ad revenues represented 97.2% of total revenues, which decreased 4.2% year over year to $31.25 billion. The declining revenue trend is expected to have continued in the first quarter.
The company’s first-quarter guidance reflects macroeconomic and forex concerns. Weak advertising demand is a headwind. It expects Reels to monetize much slower than feed or stories, which is a concern.
Nevertheless, Facebook’s expanding user base (2 billion daily active users) is expected to have benefited top-line growth in the to-be-reported quarter. The growing usage of reels is also noteworthy.
Increased engagement for Meta’s offerings like Instagram, WhatsApp, Messenger, and Facebook has been a major growth driver. Effective usage of Artificial Intelligence has been helping the company keep its users engaged. Higher engagement level is helping to steady its user growth across all regions, particularly Asia Pacific.
What Our Model Says
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is the exact case here.
Meta has an Earnings ESP of +11.23% and currently has a Zacks Rank #1 (Strong Buy). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are a few other companies worth considering, as our model shows that these too have the right combination of elements to beat on earnings in their upcoming releases:
Image: Bigstock
Meta Platforms (META) to Report Q1 Earnings: What to Expect
Meta Platforms (META - Free Report) is set to report its first-quarter 2023 results on Apr 26.
Meta expects total revenues between $26 billion and $28.5 billion for the first quarter of 2023. Unfavorable forex is expected to hurt year-over-year top-line growth by 2%.
The Zacks Consensus Estimate for first-quarter revenues is pegged at $27.49 billion, indicating a decrease of 1.51% from the year-ago quarter’s reported figure.
The consensus mark for earnings stands at $1.96 per share, down by a cent over the past 30 days, suggesting a decline of 27.94% from the figure reported in the year-ago quarter.
Meta Platforms, Inc. Price and EPS Surprise
Meta Platforms, Inc. price-eps-surprise | Meta Platforms, Inc. Quote
Meta’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, the average surprise being 8.56%.
Let’s see how things have shaped up for the upcoming announcement.
Factors to Note
Meta’s first-quarter top line is expected to have been affected by a challenging macroeconomic environment, high inflation, and rising interest rates hurting the ad spending budgets of enterprises. This is expected to have weighed on ad revenues in the to-be-reported quarter.
The company’s ad revenue business is facing a decline in growth due to ad targeting-related headwinds created by Apple’s (AAPL - Free Report) iOS changes.
Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. However, measuring these outcomes is tough.
In the fourth quarter of 2022, Meta’s ad revenues represented 97.2% of total revenues, which decreased 4.2% year over year to $31.25 billion. The declining revenue trend is expected to have continued in the first quarter.
The company’s first-quarter guidance reflects macroeconomic and forex concerns. Weak advertising demand is a headwind. It expects Reels to monetize much slower than feed or stories, which is a concern.
Nevertheless, Facebook’s expanding user base (2 billion daily active users) is expected to have benefited top-line growth in the to-be-reported quarter. The growing usage of reels is also noteworthy.
Increased engagement for Meta’s offerings like Instagram, WhatsApp, Messenger, and Facebook has been a major growth driver. Effective usage of Artificial Intelligence has been helping the company keep its users engaged. Higher engagement level is helping to steady its user growth across all regions, particularly Asia Pacific.
What Our Model Says
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is the exact case here.
Meta has an Earnings ESP of +11.23% and currently has a Zacks Rank #1 (Strong Buy). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are a few other companies worth considering, as our model shows that these too have the right combination of elements to beat on earnings in their upcoming releases:
NETGEAR (NTGR - Free Report) has an Earnings ESP of +15.79% and a Zacks Rank #2.You can see the complete list of today’s Zacks #1 Rank stocks here.
NETGEAR shares have declined 4.2% year to date. NTGR is set to report its first-quarter 2023 results on Apr 26.
Cloudflare (NET - Free Report) has an Earnings ESP of +14.29% and a Zacks Rank #2.
Cloudflare shares have gained 39.1% year to date. NET is set to report its first-quarter 2023 results on Apr 27.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.