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Will Lower Ad Revenues Hurt Meta Platforms (META) Q1 Earnings?
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Meta Platforms’ (META - Free Report) first-quarter 2023 results, set to be reported on Apr 26, are expected to suffer from weak advertising revenues.
The Zacks Consensus Estimate for first-quarter advertising is pegged at $26.59 billion, down 1.5% year over year. Our estimate stands at $25.35 billion, down 6.1% year over year.
In the fourth quarter of 2022, advertising revenues (99.4% of Family of Apps revenues) decreased 4.2% year over year to $31.25 billion and accounted for 97.2% of revenues.
Ad targeting-related headwinds are expected to have affected the ad-revenue growth rate in the to-be-reported quarter. It is worth mentioning that changes made by Apple (AAPL - Free Report) and Google in their mobile operating systems and browser platforms have limited Meta’s ability to track the user-activity trend.
Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. Measuring these outcomes has also become difficult, thereby hurting its ad revenue growth.
Moreover, Meta’s first-quarter results are expected to be adversely affected by higher interest expenses, raging inflation and challenging macroeconomic conditions globally.
Click here to know how Meta’s overall first-quarter performance is likely to be.
AI, ML & Metaverse Driving Prospects
Meta, which currently carries a Zacks Rank #3 (Hold), is banking its future on building the metaverse, which is a shared virtual 3D world, or multiverse created using virtual and augmented reality. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moreover, Instagram’s growing popularity in international markets, particularly in Asia, has been helping Meta expand its user base. Much of it can be attributed to the growing popularity of short-form videos, Reels on Instagram. Reels have been attracting Gen-Z to the platform amid competition from Snapchat, Twitter and TikTok.
To increase revenues, Meta has been growing video monetization, especially in short-form videos like Reels using AI and ML.
Meta’s expanding partner base, which includes the like of NVIDIA (NVDA - Free Report) and Advanced Micro Devices (AMD - Free Report) , is noteworthy in this regard.
AMD collaborated with META as an ecosystem partner to build a metaverse-ready radio access unit. AMD’s radio chip Xilinx Zynq UltraScale RFSoC will be utilized to develop multiple Evenstar radio units to expand 4G/5G mobile network infrastructure, which is crucial for the metaverse.
Meta also collaborated with NVIDIA to build an AI research supercomputer, which is helping its researchers to build different AI models crucial for building the metaverse.
What Do the Estimates Say?
The Zacks Consensus Estimate for first-quarter earnings stands at $1.96 per share, unchanged over the past 30 days but down 27.94% from the figure reported in the year-ago quarter.
Our first-quarter earnings estimate stands at $1.73 per share, indicating a 36.6% year-over-year decline.
The consensus estimate for first-quarter revenues is currently pegged at $26.01 billion, indicating a decline of 6.8% from the figure reported in the year-ago quarter.
Image: Bigstock
Will Lower Ad Revenues Hurt Meta Platforms (META) Q1 Earnings?
Meta Platforms’ (META - Free Report) first-quarter 2023 results, set to be reported on Apr 26, are expected to suffer from weak advertising revenues.
The Zacks Consensus Estimate for first-quarter advertising is pegged at $26.59 billion, down 1.5% year over year. Our estimate stands at $25.35 billion, down 6.1% year over year.
In the fourth quarter of 2022, advertising revenues (99.4% of Family of Apps revenues) decreased 4.2% year over year to $31.25 billion and accounted for 97.2% of revenues.
Ad targeting-related headwinds are expected to have affected the ad-revenue growth rate in the to-be-reported quarter. It is worth mentioning that changes made by Apple (AAPL - Free Report) and Google in their mobile operating systems and browser platforms have limited Meta’s ability to track the user-activity trend.
Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. Measuring these outcomes has also become difficult, thereby hurting its ad revenue growth.
Meta Platforms, Inc. Revenue (TTM)
Meta Platforms, Inc. revenue-ttm | Meta Platforms, Inc. Quote
Moreover, Meta’s first-quarter results are expected to be adversely affected by higher interest expenses, raging inflation and challenging macroeconomic conditions globally.
Click here to know how Meta’s overall first-quarter performance is likely to be.
AI, ML & Metaverse Driving Prospects
Meta, which currently carries a Zacks Rank #3 (Hold), is banking its future on building the metaverse, which is a shared virtual 3D world, or multiverse created using virtual and augmented reality. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moreover, Instagram’s growing popularity in international markets, particularly in Asia, has been helping Meta expand its user base. Much of it can be attributed to the growing popularity of short-form videos, Reels on Instagram. Reels have been attracting Gen-Z to the platform amid competition from Snapchat, Twitter and TikTok.
To increase revenues, Meta has been growing video monetization, especially in short-form videos like Reels using AI and ML.
Meta’s expanding partner base, which includes the like of NVIDIA (NVDA - Free Report) and Advanced Micro Devices (AMD - Free Report) , is noteworthy in this regard.
AMD collaborated with META as an ecosystem partner to build a metaverse-ready radio access unit. AMD’s radio chip Xilinx Zynq UltraScale RFSoC will be utilized to develop multiple Evenstar radio units to expand 4G/5G mobile network infrastructure, which is crucial for the metaverse.
Meta also collaborated with NVIDIA to build an AI research supercomputer, which is helping its researchers to build different AI models crucial for building the metaverse.
What Do the Estimates Say?
The Zacks Consensus Estimate for first-quarter earnings stands at $1.96 per share, unchanged over the past 30 days but down 27.94% from the figure reported in the year-ago quarter.
Our first-quarter earnings estimate stands at $1.73 per share, indicating a 36.6% year-over-year decline.
The consensus estimate for first-quarter revenues is currently pegged at $26.01 billion, indicating a decline of 6.8% from the figure reported in the year-ago quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.