Meta shares dip following cautious commentary about unrest in the Middle East

Key Points

• Meta (formerly Facebook) reported strong third-quarter results, including a 23% increase in revenue to $34.15 billion and a 164% jump in net income to $11.58 billion, which exceeded Wall Street’s expectations. This marked a positive change for the company after facing a decline in its core digital ads business for three consecutive quarters in 2022.
• Despite the initially positive reaction from investors, Meta’s stock price dipped more than 4% in premarket trading following cautious comments by the company’s finance chief, Susan Li, regarding potential advertising softness due to the ongoing Israel-Hamas conflict. As a result, Meta provided a wider range for its fourth-quarter guidance, estimating revenue between $36.5 billion and $40 billion, compared to its typical $2.5 billion gap.
• Analysts remain optimistic about Meta’s performance, acknowledging a slowdown in brand advertising demand but believing that ad demand has already begun to recover. They highlight Meta’s investments in artificial intelligence (AI) and various products, such as Reels, as factors contributing to its resilience in the face of geopolitical uncertainties. Despite near-term volatility related to geopolitical uncertainty, analysts believe in the durability of Meta’s top-line growth.