We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
It expects total revenues between $36.5 billion and $39 billion for the second quarter of 2024.
The Zacks Consensus Estimate for second-quarter revenues is pegged at $38.27 billion, indicating an increase of 19.59% from the year-ago quarter’s reported figure.
The consensus mark for earnings stands at $4.69 per share, up 0.6% over the past 30 days, suggesting growth of 45.2% from the figure reported in the year-ago quarter.
Meta Platforms’ earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 13.3%.
Let’s see how things have shaped up for the upcoming announcement.
Factors to Note
META is riding on strong advertising revenue growth prospects. In the first quarter of 2024, advertising revenues increased 26.8% year over year to $35.64 billion and accounted for 97.8% of revenues. At constant currency, advertising revenues increased 26% year over year.
Meta Platforms’ advertising revenues are expected to benefit from strong spending by advertisers as they leverage its growing AI prowess.
The Zacks Consensus Estimate for second-quarter 2024 advertising revenues is currently pegged at $37.51 billion, suggesting 19.1% year-over-year growth.
Meta Platforms’ offerings — WhatsApp, Instagram, Messenger and Facebook — currently reach more than three billion people daily. Its staggering reach and increasing ad impressions (up 20% year over year in the first quarter of 2024) make META one of the most important players in the digital ad sales market apart from Alphabet’s (GOOGL - Free Report) Google and YouTube.
In its recently concluded second-quarter 2024, Google’s advertising revenues rose 11.1% year over year to $64.62 billion. YouTube’s advertising revenues improved 13% year over year to $8.7 billion.
META has been leveraging AI and machine learning to boost the potency of its social-media offerings, including WhatsApp, Instagram, Facebook and Threads. Effective usage of AI has been helping the company keep its users engaged. AI-driven feed recommendations have been a key catalyst.
However, rising expenses related to investments in developing more advanced models and AI services are expected to keep margins under pressure. The Reality Labs business continues to burn cash, which doesn’t bode well for META’s near-term prospects.
META Shares Outperform Sector, S&P 500
META shares have gained 31.5% year to date, outperforming the Zacks Computer & Technology sector’s return of 18.3% and the S&P 500’s 14.6%.
Meta Platforms stock is not so cheap, as the Value Style Score of C suggests a stretched valuation at this moment.
In terms of the forward 12-month Price/Sales ratio, META is trading at 6.9X, higher than the Zacks Computer & Technology sector’s 6.3X and the Zacks Internet Software industry’s 2.43X.
Price/Sales Ratio (F12M)
Image Source: Zacks Investment Research
META Leverages AI to Boost Growth
Meta Platforms is leveraging AI to boost engagement. Currently, 30% of the posts on Facebook feed are delivered by its AI recommendation system. AI-recommended content now comprises more than 50% of the content people see on Instagram.
META is now incorporating AI tools into WhatsApp to make businesses more customer-oriented. The rapid adoption of Generative AI (GenAI) is transforming conversational messaging platforms like WhatsApp to perform conversational commerce, including transactions like ride-hailing and grocery purchases. The AI tools will enable businesses to help customers find new products.
Meta Platforms is leveraging AI to boost Facebook’s appeal among young adults, a demography that prefers YouTube and Snap’s Snapchat.
Powered by cutting-edge AI, META is offering user-centric features, positioning Facebook as a platform that resonates with young adults. It has upgraded Reels and Feed ranking technologies, resulting in better content recommendations. A newly developed model architecture allows for efficient learning from large datasets, significantly improving the performance of Facebook Reels.
However, monetization of these AI initiatives is expected to take considerable time. Meta Platforms now expects to invest significantly more over the next few years in developing more advanced models and the largest AI services in the world. Hence, the growth prospects remain modest in the near term.
Risk-averse investors should note that growing regulatory concerns don’t bode well for META’s prospects. It is suffering from privacy regulations in Europe and the United States and is also expected to face antitrust issues in its usage of AI.
Conclusion
META’s usage of AI bodes well for its long-term prospects. Hence, investors who already own the stock may expect the company's growth prospects to be rewarding over the long term.
However, META’s near-term prospects are full of challenges. Modest growth prospects and stretched valuation make it a risky bet for investors.
Meta Platforms currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock.
Image: Bigstock
META Stock Before Q2 Earnings Report: To Buy or Not to Buy?
Meta Platforms (META - Free Report) is set to report its second-quarter 2024 results on Jul 31.
It expects total revenues between $36.5 billion and $39 billion for the second quarter of 2024.
The Zacks Consensus Estimate for second-quarter revenues is pegged at $38.27 billion, indicating an increase of 19.59% from the year-ago quarter’s reported figure.
The consensus mark for earnings stands at $4.69 per share, up 0.6% over the past 30 days, suggesting growth of 45.2% from the figure reported in the year-ago quarter.
Meta Platforms’ earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 13.3%.
Meta Platforms, Inc. Price and EPS Surprise
Meta Platforms, Inc. price-eps-surprise | Meta Platforms, Inc. Quote
Let’s see how things have shaped up for the upcoming announcement.
Factors to Note
META is riding on strong advertising revenue growth prospects. In the first quarter of 2024, advertising revenues increased 26.8% year over year to $35.64 billion and accounted for 97.8% of revenues. At constant currency, advertising revenues increased 26% year over year.
Meta Platforms’ advertising revenues are expected to benefit from strong spending by advertisers as they leverage its growing AI prowess.
The Zacks Consensus Estimate for second-quarter 2024 advertising revenues is currently pegged at $37.51 billion, suggesting 19.1% year-over-year growth.
Meta Platforms’ offerings — WhatsApp, Instagram, Messenger and Facebook — currently reach more than three billion people daily. Its staggering reach and increasing ad impressions (up 20% year over year in the first quarter of 2024) make META one of the most important players in the digital ad sales market apart from Alphabet’s (GOOGL - Free Report) Google and YouTube.
In its recently concluded second-quarter 2024, Google’s advertising revenues rose 11.1% year over year to $64.62 billion. YouTube’s advertising revenues improved 13% year over year to $8.7 billion.
META has been leveraging AI and machine learning to boost the potency of its social-media offerings, including WhatsApp, Instagram, Facebook and Threads. Effective usage of AI has been helping the company keep its users engaged. AI-driven feed recommendations have been a key catalyst.
However, rising expenses related to investments in developing more advanced models and AI services are expected to keep margins under pressure. The Reality Labs business continues to burn cash, which doesn’t bode well for META’s near-term prospects.
META Shares Outperform Sector, S&P 500
META shares have gained 31.5% year to date, outperforming the Zacks Computer & Technology sector’s return of 18.3% and the S&P 500’s 14.6%.
It has also outperformed peers including Pinterest (PINS - Free Report) , Snap (SNAP - Free Report) , Bumble and GOOGL.
Year-to-Date Performance Chart
Image Source: Zacks Investment Research
Meta Platforms stock is not so cheap, as the Value Style Score of C suggests a stretched valuation at this moment.
In terms of the forward 12-month Price/Sales ratio, META is trading at 6.9X, higher than the Zacks Computer & Technology sector’s 6.3X and the Zacks Internet Software industry’s 2.43X.
Price/Sales Ratio (F12M)
Image Source: Zacks Investment Research
META Leverages AI to Boost Growth
Meta Platforms is leveraging AI to boost engagement. Currently, 30% of the posts on Facebook feed are delivered by its AI recommendation system. AI-recommended content now comprises more than 50% of the content people see on Instagram.
META is now incorporating AI tools into WhatsApp to make businesses more customer-oriented. The rapid adoption of Generative AI (GenAI) is transforming conversational messaging platforms like WhatsApp to perform conversational commerce, including transactions like ride-hailing and grocery purchases. The AI tools will enable businesses to help customers find new products.
Meta Platforms is leveraging AI to boost Facebook’s appeal among young adults, a demography that prefers YouTube and Snap’s Snapchat.
Powered by cutting-edge AI, META is offering user-centric features, positioning Facebook as a platform that resonates with young adults. It has upgraded Reels and Feed ranking technologies, resulting in better content recommendations. A newly developed model architecture allows for efficient learning from large datasets, significantly improving the performance of Facebook Reels.
However, monetization of these AI initiatives is expected to take considerable time. Meta Platforms now expects to invest significantly more over the next few years in developing more advanced models and the largest AI services in the world. Hence, the growth prospects remain modest in the near term.
Risk-averse investors should note that growing regulatory concerns don’t bode well for META’s prospects. It is suffering from privacy regulations in Europe and the United States and is also expected to face antitrust issues in its usage of AI.
Conclusion
META’s usage of AI bodes well for its long-term prospects. Hence, investors who already own the stock may expect the company's growth prospects to be rewarding over the long term.
However, META’s near-term prospects are full of challenges. Modest growth prospects and stretched valuation make it a risky bet for investors.
Meta Platforms currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.