Technology
Thursday, February 1st, 2024 5:32 pm EDT
Key Points
- Analyst Expectations for Meta’s Q4 Earnings:
- Earnings: Analysts surveyed by LSEG (formerly Refinitiv) expect $4.96 per share.
- Revenue: The projected revenue is $39.18 billion.
- Key User Metrics:
- Daily Active Users (DAUs): Analysts anticipate 2.08 billion DAUs according to StreetAccount.
- Monthly Active Users (MAUs): The expected MAUs are 3.06 billion, as per StreetAccount.
- Average Revenue Per User (ARPU): The projected ARPU is $12.81, according to StreetAccount.
- Projected Revenue Growth and Factors Influencing Meta’s Performance:
- Revenue Growth: Meta is anticipated to report a 22% growth in revenue, attributed to the ongoing recovery of the online advertising market from the challenges faced in 2022, including inflation and rising interest rates that impacted brand spending.
- Advances in Artificial Intelligence: CEO Mark Zuckerberg attributes improvements in Meta’s advertising business to advances in artificial intelligence, outpacing the growth of rival Google. In Alphabet’s recent earnings report, Google’s ad revenue increased by 11% year-over-year, falling short of analysts’ expectations.
- Influence of Chinese Retailers and Potential Risks:
- Role of Chinese Retailers: Chinese retailers have played a significant role in Meta’s financial recovery by increasing spending to reach a global audience. Fast-growing companies like Temu and Shein, originating in China, have heavily invested in ads on Facebook and Instagram.
- Potential Risks: Despite Meta’s diverse advertiser base, some analysts express concerns about the potential for Chinese advertisers like Temu and Shein to reduce spending. Every point of growth is crucial for Meta, especially after experiencing revenue contractions for three consecutive quarters in 2022.
- Challenges and Congressional Hearing Impact:
- Tough Questioning by Lawmakers: CEO Mark Zuckerberg, along with executives from TikTok, X (formerly Twitter), Snap, and Discord, faced tough questioning from lawmakers regarding child exploitation on Meta’s family of apps. Accusations were made about ignoring the severity of the issue.
- Insufficient Safety Measures: Parents attending the hearing criticized Meta and other companies for alleged insufficient safety and design measures, leading to mental health issues and, in some cases, tragic outcomes for their children.
- Focus on Metaverse and Reality Labs:
- Metaverse Pivot: Investors are keen on signs indicating the success of Meta’s pivot to the metaverse. The company has invested billions to build a virtual world that Zuckerberg envisions as the future of computing.
- Financial Metrics for Reality Labs: Analysts expect Reality Labs to show revenue of $762.8 million for the quarter and an operating loss of $4.26 billion, according to StreetAccount.
- Conclusion of Tech Earnings Season:
- Apple and Amazon Earnings: Meta’s earnings announcement coincides with Apple and Amazon also reporting their fourth-quarter results, marking the conclusion of earnings season for mega-cap tech companies. Investors will closely analyze Meta’s financial performance, user metrics, and the progress of its strategic initiatives, including the metaverse pivot.
Meta is scheduled to announce its fourth-quarter earnings, with analysts from LSEG, formerly Refinitiv, anticipating earnings of $4.96 per share and revenue of $39.18 billion. Key user metrics to be scrutinized include the expected 2.08 billion daily active users (DAUs), 3.06 billion monthly active users (MAUs), and an average revenue per user (ARPU) of $12.81. Meta is projected to report a 22% revenue growth, attributed to the recovery of the online advertising market from the challenges of 2022, including soaring inflation and rising interest rates. CEO Mark Zuckerberg credits advances in artificial intelligence for improvements in Meta’s ad business, outpacing the growth rate of rival Google, whose ad revenue increased 11% year-over-year in Alphabet’s recent earnings report.
Chinese retailers have played a significant role in Meta’s financial recovery, with companies like Temu and Shein, originating in China, investing heavily in ads on Facebook and Instagram. However, analysts caution that the potential for these Chinese advertisers to reduce spending poses a risk, given Meta’s need for sustained growth after experiencing revenue contractions for three consecutive quarters in 2022. The company’s diverse advertiser base mitigates some risks, but concerns persist about the impact of reduced spending from specific high-growth advertisers.
Recent challenges for Meta include a congressional hearing where CEO Mark Zuckerberg, along with executives from TikTok, X (formerly Twitter), Snap, and Discord, faced tough questioning on issues related to child exploitation on Meta’s family of apps. Parents accused Meta and other companies of inadequate safety measures leading to mental health issues and, in some cases, tragic outcomes for their children. The hearing shed light on the growing scrutiny faced by social media platforms regarding user safety and content moderation.
Investors are also keenly interested in signs that Meta’s strategic shift toward the metaverse is proving successful. Despite burning billions of dollars each quarter on metaverse development, the division has incurred substantial losses, totaling around $25 billion since early 2022 when the company was renamed. Analysts expect Meta’s Reality Labs to show a revenue of $762.8 million for the quarter and an operating loss of $4.26 billion.
Meta’s earnings announcement coincides with Apple and Amazon also reporting their fourth-quarter results, marking the conclusion of earnings season for these tech mega-cap companies. Investors and analysts will closely scrutinize Meta’s financial performance, user metrics, and progress in the metaverse, seeking insights into the company’s strategic direction and future growth prospects.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/01/meta-earnings-q4-2024.html
