Meta, formerly known as Facebook, has reported strong third-quarter earnings, exceeding both revenue and earnings per share expectations. The positive results have led to a 4% increase in Meta’s stock during after-hours trading, indicating a rebound from a disappointing performance in 2022.
The company has been focused on enhancing its AI-powered advertising efforts and expanding into the virtual reality (VR) and augmented reality (AR) sectors. This strategy appears to be paying off, as Meta’s Q3 advertising revenue reached an impressive $33.64 billion, surpassing the expected $32.94 billion. Additionally, Meta’s ad impressions experienced a 31% year-over-year growth, exceeding the expected 29.6% increase.
Investors have taken notice of Meta’s success, as its shares have outperformed both the S&P 500 and the Nasdaq Internet Index this year. However, the company is not without its challenges. Meta is currently facing legal risks from lawsuits filed by 42 attorneys general, who allege that Facebook and Instagram possess addictive features for children.
Analysts on Wall Street have mixed recommendations for Meta, with 60 Buy ratings, seven Holds, and two Sells. Despite this, Meta reported impressive Q3 revenue of $34.15 billion, a 23% increase year-over-year, and earnings per share of $4.39, a significant 168% increase year-over-year. The number of daily active users for Meta’s flagship platform, Facebook, reached 2.09 billion.
While Meta’s advertising and core platforms have performed well, its mixed reality business, Reality Labs, has experienced significant losses since 2022, totaling over $20 billion. Nevertheless, Meta’s Family of Apps, including WhatsApp, generated over $33 billion in revenue, surpassing expectations.
CEO Mark Zuckerberg expressed his enthusiasm for Meta’s advancements in AI, mixed reality, and the upcoming launch of new products, such as the Quest 3 headset and Ray-Ban Meta smart glasses. Looking ahead, Meta plans to reduce its capital expenditures in 2023 and anticipates ongoing losses from Reality Labs in the coming year.
In terms of the fourth quarter, Meta’s revenue outlook is projected to be between $36.5 billion and $40 billion, slightly lower than the expected $38.76 billion. Despite this slight adjustment, Meta’s strong Q3 performance and future plans indicate a positive trajectory for the company.
“Infuriatingly humble tv expert. Friendly student. Travel fanatic. Bacon fan. Unable to type with boxing gloves on.”