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Magnificent Meta a Compelling Buy Ahead of Q1 Earnings
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After a dismal 2022, Facebook-parent, Meta Platforms, Inc. (META - Free Report) made a terrific comeback last year. Meta Platforms delivered record sales in the fourth quarter of 2023 and joined the trillion-dollar market capitalization at the onset of 2024.
A rebound in Meta Platforms’ flagship ad business and its cost-cutting initiatives further bolstered expectations for bullish first-quarter 2024 earnings results, slated to be released on Apr 24, after market close.
Meta Platforms is estimated to report earnings per share of $4.32 for the first three months of 2024, more than $2.64 a year ago, representing a jump of 63.6%. Moreover, Meta Platforms has an Earnings ESP of +0.62%, a tell-tale sign that the stock has a good chance to surprise in the upcoming earnings announcement.
Meta Platforms’ shares, rightfully, soared around 37% in the first quarter. However, its shares are trading in the negative territory in April, more or less matching the broader market. Skeptics doubt Meta Platforms’ big spending goal on generative AI and the Metaverse as it may impact the company’s financials.
Yet, Meta Platforms’ current hiccup is momentary. Instead, the company remains a market darling. This is because Meta Platforms’ digital advertising business is gaining strength from e-commerce firms in China.
Discount shopping app, Temu has given stiff competition to Amazon.com, Inc. (AMZN - Free Report) in China as it racked up solid sales in the past year. Now, PDD Holdings Inc. (PDD - Free Report) , Temu’s parent company has extensively used Meta Platforms’ Instagram and Facebook platforms with ads for Temu, something that bodes well for the social media behemoth.
Interestingly, Meta Platforms is currently teaming up with Amazon. Links will be provided on the Instagram and Facebook platforms for users to purchase goods from Amazon. This initiative will boost Meta Platforms’ ad revenues as well as improve transaction growth for Amazon. What’s more, competing rivals could further strike similar deals with Meta Platforms, a tailwind for the company.
Meanwhile, the House of Representative’s inclination toward banning TikTok from operating in the United States should stand in good stead for Meta Platforms. TikTok is suspected of becoming a security threat as it influences public opinion in the United States. Nonetheless, banning TikTok will compel its audience to shift toward Instagram reels, and advertisements will follow.
Statista, meanwhile, reported that the AI market is expected to see a CAGR of 15.83% from 2024 and 2030. Meta Platforms, thus, has joined the AI frenzy, which should help its shares gain traction. The company’s CEO, Mark Zuckerberg recently launched the Meta.ai chatbot. Meta Platforms has also launched an updated AI chip to enhance its data centers.
Meta Platforms’ bet on Metaverse somehow didn’t look good for the company. Its Reality Labs division has been incurring losses for quite some time. But lately, with the launch of Quest 3, Meta Platforms’ VR headset, sales from the Reality Labs division are poised to improve. Lest we forget, Mark Zuckerberg has already downplayed the threat from Apple Inc’s (AAPL - Free Report) Vision Pro headset.
The current year is also the ‘Year of Efficiency’ for Meta Platforms. The company has slashed umpteen jobs to streamline its operation. Such cost-cutting measures will help the company mitigate macroeconomic headwinds, apprehensions of a recession and higher interest rates. The company, anyhow, is cash-rich making it unperturbed to market upheavals. Meta Platforms’ cash and cash equivalents were $65.4 billion as of Dec 31, 2023, up from $61.12 billion on Sep 30, 2023.
To top it, the net profit margin of Meta Platforms is nearly 29%, way higher than the 20% mark, indicating a high margin. In other words, the company has kept its operating expenses under check and is worthy of generating the necessary profit from sales. In reality, Meta Platforms have been efficiently generating profits since it has a return on equity of 29.5%, which is typically considered good.
Additionally, Meta Platforms enjoy an economic moat. Almost half of social media platform handlers globally are using Meta Platforms’ applications. This diversification and huge audience base protect the company from any downside risk.
The social media giant also began paying dividends recently, and a passive income surely shouldn’t bother any razor-sharp investor. Meta Platforms’ annual dividend yield is 0.42%, which is less, but the company is just starting. Thus, Meta Platforms’ shares have more upside left in the near future and is currently a compelling buy.
Meta Platforms’ expected earnings growth rate for the current and next year is 35.7% and 15.2%, respectively. Its estimated revenue growth rate for the current and next years is 18.2% and 12.8%, respectively. The Zacks Consensus Estimate for Meta Platforms’ current-year earnings has moved up 1.8% over the past 60 days. Meta Platforms currently possess a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
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Magnificent Meta a Compelling Buy Ahead of Q1 Earnings
After a dismal 2022, Facebook-parent, Meta Platforms, Inc. (META - Free Report) made a terrific comeback last year. Meta Platforms delivered record sales in the fourth quarter of 2023 and joined the trillion-dollar market capitalization at the onset of 2024.
A rebound in Meta Platforms’ flagship ad business and its cost-cutting initiatives further bolstered expectations for bullish first-quarter 2024 earnings results, slated to be released on Apr 24, after market close.
Meta Platforms is estimated to report earnings per share of $4.32 for the first three months of 2024, more than $2.64 a year ago, representing a jump of 63.6%. Moreover, Meta Platforms has an Earnings ESP of +0.62%, a tell-tale sign that the stock has a good chance to surprise in the upcoming earnings announcement.
Meta Platforms, Inc. Price and EPS Surprise
Meta Platforms, Inc. price-eps-surprise | Meta Platforms, Inc. Quote
Meta Platforms’ shares, rightfully, soared around 37% in the first quarter. However, its shares are trading in the negative territory in April, more or less matching the broader market. Skeptics doubt Meta Platforms’ big spending goal on generative AI and the Metaverse as it may impact the company’s financials.
Yet, Meta Platforms’ current hiccup is momentary. Instead, the company remains a market darling. This is because Meta Platforms’ digital advertising business is gaining strength from e-commerce firms in China.
Discount shopping app, Temu has given stiff competition to Amazon.com, Inc. (AMZN - Free Report) in China as it racked up solid sales in the past year. Now, PDD Holdings Inc. (PDD - Free Report) , Temu’s parent company has extensively used Meta Platforms’ Instagram and Facebook platforms with ads for Temu, something that bodes well for the social media behemoth.
Interestingly, Meta Platforms is currently teaming up with Amazon. Links will be provided on the Instagram and Facebook platforms for users to purchase goods from Amazon. This initiative will boost Meta Platforms’ ad revenues as well as improve transaction growth for Amazon. What’s more, competing rivals could further strike similar deals with Meta Platforms, a tailwind for the company.
Meanwhile, the House of Representative’s inclination toward banning TikTok from operating in the United States should stand in good stead for Meta Platforms. TikTok is suspected of becoming a security threat as it influences public opinion in the United States. Nonetheless, banning TikTok will compel its audience to shift toward Instagram reels, and advertisements will follow.
Statista, meanwhile, reported that the AI market is expected to see a CAGR of 15.83% from 2024 and 2030. Meta Platforms, thus, has joined the AI frenzy, which should help its shares gain traction. The company’s CEO, Mark Zuckerberg recently launched the Meta.ai chatbot. Meta Platforms has also launched an updated AI chip to enhance its data centers.
Meta Platforms’ bet on Metaverse somehow didn’t look good for the company. Its Reality Labs division has been incurring losses for quite some time. But lately, with the launch of Quest 3, Meta Platforms’ VR headset, sales from the Reality Labs division are poised to improve. Lest we forget, Mark Zuckerberg has already downplayed the threat from Apple Inc’s (AAPL - Free Report) Vision Pro headset.
The current year is also the ‘Year of Efficiency’ for Meta Platforms. The company has slashed umpteen jobs to streamline its operation. Such cost-cutting measures will help the company mitigate macroeconomic headwinds, apprehensions of a recession and higher interest rates. The company, anyhow, is cash-rich making it unperturbed to market upheavals. Meta Platforms’ cash and cash equivalents were $65.4 billion as of Dec 31, 2023, up from $61.12 billion on Sep 30, 2023.
To top it, the net profit margin of Meta Platforms is nearly 29%, way higher than the 20% mark, indicating a high margin. In other words, the company has kept its operating expenses under check and is worthy of generating the necessary profit from sales. In reality, Meta Platforms have been efficiently generating profits since it has a return on equity of 29.5%, which is typically considered good.
Additionally, Meta Platforms enjoy an economic moat. Almost half of social media platform handlers globally are using Meta Platforms’ applications. This diversification and huge audience base protect the company from any downside risk.
The social media giant also began paying dividends recently, and a passive income surely shouldn’t bother any razor-sharp investor. Meta Platforms’ annual dividend yield is 0.42%, which is less, but the company is just starting. Thus, Meta Platforms’ shares have more upside left in the near future and is currently a compelling buy.
Meta Platforms, Inc. Dividend Yield (TTM)
Meta Platforms, Inc. dividend-yield-ttm | Meta Platforms, Inc. Quote
Meta Platforms’ expected earnings growth rate for the current and next year is 35.7% and 15.2%, respectively. Its estimated revenue growth rate for the current and next years is 18.2% and 12.8%, respectively. The Zacks Consensus Estimate for Meta Platforms’ current-year earnings has moved up 1.8% over the past 60 days. Meta Platforms currently possess a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.