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Should Investors Consider Meta (META) or Snap's (SNAP) Stock After Q3 Earnings?
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Reporting third-quarter results on Wednesday, Meta Platforms (META - Free Report) and Snap (SNAP - Free Report) were able to exceed top and bottom line expectations but saw their stocks dip more than -3% in today’s trading session.
Snap shares initially rallied after its Q3 report with Meta continuing a post-earnings selloff on Thursday. Optimism for Snap came as its Snapchat application doubled the number of active users and advertisers from a year ago while Meta fell on concerns of increased spending.
Meta’s Q3 Results
As the leader in the realm of social media outlets, Meta’s daily active users (DAUs) were up to 3.32 billion during Q3 compared to 3.19 billion in the comparative period.
Meta posted Q3 sales of $40.58 billion which topped estimates of $40.2 billion and rose 19% from $34.14 billion in the prior-year quarter. More impressive, Q3 EPS of $6.03 beat expectations of $5.19 a share by 16% and spiked 37% from $4.39 per share a year ago.
Meta has surpassed earnings expectations for eight straight quarters posting an average EPS surprise of 11.34% in its last four quarterly reports.
Image Source: Zacks Investment Research
CEO Mark Zuckerberg stated Meta is committed to increasing its spending on AI and the metaverse which weighed on investor sentiment and appears to have led to some profit-taking after earnings. To that point, META is still sitting on nearly +60% gains in 2024.
It’s also noteworthy that Meta has $43.85 billion in cash & equivalents which increased from $41.86 billion at the end of Q3 2024 although this is down from $65.4 billion coming into the year.
That said, earnings estimate revisions have continued to trend higher for both fiscal 2024 and FY25. Considering such, Meta's stock sports a Zack Rank #2 (Buy) with its robust bottom line now projected to expand 44% in FY24 and forecasted to increase another 13% in FY25 to $24.37 per share.
Image Source: Zacks Investment Research
Snap’s Q3 Results
Snapchat’s DAUs more than doubled year over year to 443 million with Snap bringing in $1.37 billion in sales. This topped sales estimates of $1.35 billion and spiked 16% from $1.18 billion in Q3 2023.
Q3 EPS of $0.08 beat the Zacks Consensus of $0.05 and increased from $0.02 a share in the comparative quarter. Snap has reached or exceeded the Zacks EPS Consensus for nine consecutive quarters and has posted an impressive average earnings surprise of 58.57% in its last four quarterly reports.
Image Source: Zacks Investment Research
However, earnings estimate revisions for FY24 and FY25 are lower over the last 90 days landing Snap’s stock a Zacks Rank #4 (Sell) at the moment. Snap shares are down -27% year to date with the company striving to stay above the profitability line after going public in 2017.
Image Source: Zacks Investment Research
Takeaway
The post-earnings dip in Meta’s stock could certainly lead to an opportunity for longer-term investors. Meanwhile, caution may be advised when investing in Snap shares until there is hopefully a more favorable trend of earnings estimate revisions.
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Should Investors Consider Meta (META) or Snap's (SNAP) Stock After Q3 Earnings?
Reporting third-quarter results on Wednesday, Meta Platforms (META - Free Report) and Snap (SNAP - Free Report) were able to exceed top and bottom line expectations but saw their stocks dip more than -3% in today’s trading session.
Snap shares initially rallied after its Q3 report with Meta continuing a post-earnings selloff on Thursday. Optimism for Snap came as its Snapchat application doubled the number of active users and advertisers from a year ago while Meta fell on concerns of increased spending.
Meta’s Q3 Results
As the leader in the realm of social media outlets, Meta’s daily active users (DAUs) were up to 3.32 billion during Q3 compared to 3.19 billion in the comparative period.
Meta posted Q3 sales of $40.58 billion which topped estimates of $40.2 billion and rose 19% from $34.14 billion in the prior-year quarter. More impressive, Q3 EPS of $6.03 beat expectations of $5.19 a share by 16% and spiked 37% from $4.39 per share a year ago.
Meta has surpassed earnings expectations for eight straight quarters posting an average EPS surprise of 11.34% in its last four quarterly reports.
Image Source: Zacks Investment Research
CEO Mark Zuckerberg stated Meta is committed to increasing its spending on AI and the metaverse which weighed on investor sentiment and appears to have led to some profit-taking after earnings. To that point, META is still sitting on nearly +60% gains in 2024.
It’s also noteworthy that Meta has $43.85 billion in cash & equivalents which increased from $41.86 billion at the end of Q3 2024 although this is down from $65.4 billion coming into the year.
That said, earnings estimate revisions have continued to trend higher for both fiscal 2024 and FY25. Considering such, Meta's stock sports a Zack Rank #2 (Buy) with its robust bottom line now projected to expand 44% in FY24 and forecasted to increase another 13% in FY25 to $24.37 per share.
Image Source: Zacks Investment Research
Snap’s Q3 Results
Snapchat’s DAUs more than doubled year over year to 443 million with Snap bringing in $1.37 billion in sales. This topped sales estimates of $1.35 billion and spiked 16% from $1.18 billion in Q3 2023.
Q3 EPS of $0.08 beat the Zacks Consensus of $0.05 and increased from $0.02 a share in the comparative quarter. Snap has reached or exceeded the Zacks EPS Consensus for nine consecutive quarters and has posted an impressive average earnings surprise of 58.57% in its last four quarterly reports.
Image Source: Zacks Investment Research
However, earnings estimate revisions for FY24 and FY25 are lower over the last 90 days landing Snap’s stock a Zacks Rank #4 (Sell) at the moment. Snap shares are down -27% year to date with the company striving to stay above the profitability line after going public in 2017.
Image Source: Zacks Investment Research
Takeaway
The post-earnings dip in Meta’s stock could certainly lead to an opportunity for longer-term investors. Meanwhile, caution may be advised when investing in Snap shares until there is hopefully a more favorable trend of earnings estimate revisions.