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Why Is Meta Platforms (META) Up 6% Since Last Earnings Report?
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It has been about a month since the last earnings report for Meta Platforms (META - Free Report) . Shares have added about 6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Meta Platforms due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
META’s Q2 Earnings Miss Estimates, Revenues Rise Y/Y on Ad Growth
Meta Platforms reported second-quarter 2026 earnings of $6.18 per share, down 13.4% year over year and lagging the Zacks Consensus Estimate by 12.96%. Revenues climbed 28% year over year to $60.80 billion and surpassed the consensus mark by 0.98%.
Strong advertising demand and improving monetization supported the top line. Ad impressions increased 14% year over year, while the average price per ad advanced 12%. However, sharply higher infrastructure, compensation and legal-related costs weighed on profitability.
META's Ad Engine Drives Top-Line Growth
Family of Apps revenues, accounting for 99.3% of total revenues, increased 28% year over year to $60.37 billion. Advertising revenues rose 27% year over year to $59.36 billion, reflecting healthy engagement, user growth and ad-load optimization across Meta’s services.
Family of Apps other revenues jumped 72.7% year over year to $1.01 billion, surpassing $1 billion for the first time. Growth was primarily driven by WhatsApp paid messaging and subscription revenues, providing Meta with additional monetization avenues beyond advertising.
Reality Labs revenues increased 16.5% year over year to $431 million, driven by growth in AI glasses sales, partially offset by lower Quest headset revenues.
Meta’s AI Gains Lift Engagement and Ads
Family daily active people averaged 3.60 billion in June, up 3% year over year. Instagram reached 2 billion daily active users, while Threads surpassed 500 million monthly active users. Global time spent on Instagram grew at a double-digit rate, supported by improvements to Feed and Reels recommendations.
Meta also reported measurable gains from AI-powered advertising systems. Advances in user understanding, ad ranking and sequence learning generated an 8.3% increase in ad clicks and a 15.7% uplift in Facebook conversions. Advantage+ solutions reached an annual revenue run rate of more than $75 billion.
META’s Costs Pressure Margins and Earnings
Total costs and expenses surged 55% year over year to $42.03 billion. The increase included $2.40 billion in charges related to legal proceedings and $1.18 billion in severance expenses tied to the May 2026 headcount reduction.
Operating income declined 8.2% year over year to $18.78 billion, while the operating margin contracted to 31% from 43% in the year-ago quarter. Excluding legal charges and severance expenses, META said operating income would have increased 9% year over year. Higher employee compensation, depreciation, data center operating costs, cloud spending and third-party AI token costs remained major expense drivers.
Family of Apps operating income fell 6.3% year over year to $23.39 billion. The segment continued to generate substantial profits, but elevated investment levels more than offset the benefit of strong revenue growth during the quarter.
Reality Labs segment operating loss widened to $4.62 billion from $4.53 billion, reflecting Meta’s continued spending on augmented and virtual reality products.
META’s Cash Flow Funds Heavy AI Buildout
Cash flow from operating activities totaled $31.86 billion. Capital expenditures, including principal payments on finance leases, nearly doubled to $31.08 billion from $17.01 billion, leaving free cash flow of $784 million.
Meta ended the second quarter of 2026 with $90.26 billion in cash, cash equivalents and marketable securities. Long-term debt stood at $83.66 billion.
The company issued nearly $25 billion of long-term debt during the reported quarter as it expanded the mix of capital used to fund long-duration infrastructure projects.
Meta’s Outlook Raises Spending Visibility
For the third quarter of 2026, Meta expects revenues between $61 billion and $64 billion. The forecast assumes foreign currency will create an approximately 1% headwind to year-over-year revenue growth.
The company raised the lower end of its 2026 expense outlook and now expects total expenses of $165 billion to $169 billion. Meta continues to expect 2026 operating income to exceed the 2025 level and projects a tax rate of 15-17% for the remaining quarters.
Meta narrowed its capital expenditure forecast to $130 billion-$145 billion from $125 billion-$145 billion.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Meta Platforms has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Meta Platforms has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Meta Platforms belongs to the Zacks Internet - Software industry. Another stock from the same industry, Calix (CALX - Free Report) , has gained 7.1% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.
Calix reported revenues of $293.33 million in the last reported quarter, representing a year-over-year change of +21.3%. EPS of $0.47 for the same period compares with $0.33 a year ago.
Calix is expected to post earnings of $0.42 per share for the current quarter, representing a year-over-year change of -4.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Calix. Also, the stock has a VGM Score of B.
View the Zacks #1 Rank List
Image: Bigstock
Why Is Meta Platforms (META) Up 6% Since Last Earnings Report?
It has been about a month since the last earnings report for Meta Platforms (META - Free Report) . Shares have added about 6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Meta Platforms due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
META’s Q2 Earnings Miss Estimates, Revenues Rise Y/Y on Ad Growth
Meta Platforms reported second-quarter 2026 earnings of $6.18 per share, down 13.4% year over year and lagging the Zacks Consensus Estimate by 12.96%. Revenues climbed 28% year over year to $60.80 billion and surpassed the consensus mark by 0.98%.
Strong advertising demand and improving monetization supported the top line. Ad impressions increased 14% year over year, while the average price per ad advanced 12%. However, sharply higher infrastructure, compensation and legal-related costs weighed on profitability.
META's Ad Engine Drives Top-Line Growth
Family of Apps revenues, accounting for 99.3% of total revenues, increased 28% year over year to $60.37 billion. Advertising revenues rose 27% year over year to $59.36 billion, reflecting healthy engagement, user growth and ad-load optimization across Meta’s services.
Family of Apps other revenues jumped 72.7% year over year to $1.01 billion, surpassing $1 billion for the first time. Growth was primarily driven by WhatsApp paid messaging and subscription revenues, providing Meta with additional monetization avenues beyond advertising.
Reality Labs revenues increased 16.5% year over year to $431 million, driven by growth in AI glasses sales, partially offset by lower Quest headset revenues.
Meta’s AI Gains Lift Engagement and Ads
Family daily active people averaged 3.60 billion in June, up 3% year over year. Instagram reached 2 billion daily active users, while Threads surpassed 500 million monthly active users. Global time spent on Instagram grew at a double-digit rate, supported by improvements to Feed and Reels recommendations.
Meta also reported measurable gains from AI-powered advertising systems. Advances in user understanding, ad ranking and sequence learning generated an 8.3% increase in ad clicks and a 15.7% uplift in Facebook conversions. Advantage+ solutions reached an annual revenue run rate of more than $75 billion.
META’s Costs Pressure Margins and Earnings
Total costs and expenses surged 55% year over year to $42.03 billion. The increase included $2.40 billion in charges related to legal proceedings and $1.18 billion in severance expenses tied to the May 2026 headcount reduction.
Operating income declined 8.2% year over year to $18.78 billion, while the operating margin contracted to 31% from 43% in the year-ago quarter. Excluding legal charges and severance expenses, META said operating income would have increased 9% year over year. Higher employee compensation, depreciation, data center operating costs, cloud spending and third-party AI token costs remained major expense drivers.
Family of Apps operating income fell 6.3% year over year to $23.39 billion. The segment continued to generate substantial profits, but elevated investment levels more than offset the benefit of strong revenue growth during the quarter.
Reality Labs segment operating loss widened to $4.62 billion from $4.53 billion, reflecting Meta’s continued spending on augmented and virtual reality products.
META’s Cash Flow Funds Heavy AI Buildout
Cash flow from operating activities totaled $31.86 billion. Capital expenditures, including principal payments on finance leases, nearly doubled to $31.08 billion from $17.01 billion, leaving free cash flow of $784 million.
Meta ended the second quarter of 2026 with $90.26 billion in cash, cash equivalents and marketable securities. Long-term debt stood at $83.66 billion.
The company issued nearly $25 billion of long-term debt during the reported quarter as it expanded the mix of capital used to fund long-duration infrastructure projects.
Meta’s Outlook Raises Spending Visibility
For the third quarter of 2026, Meta expects revenues between $61 billion and $64 billion. The forecast assumes foreign currency will create an approximately 1% headwind to year-over-year revenue growth.
The company raised the lower end of its 2026 expense outlook and now expects total expenses of $165 billion to $169 billion. Meta continues to expect 2026 operating income to exceed the 2025 level and projects a tax rate of 15-17% for the remaining quarters.
Meta narrowed its capital expenditure forecast to $130 billion-$145 billion from $125 billion-$145 billion.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Meta Platforms has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Meta Platforms has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Meta Platforms belongs to the Zacks Internet - Software industry. Another stock from the same industry, Calix (CALX - Free Report) , has gained 7.1% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.
Calix reported revenues of $293.33 million in the last reported quarter, representing a year-over-year change of +21.3%. EPS of $0.47 for the same period compares with $0.33 a year ago.
Calix is expected to post earnings of $0.42 per share for the current quarter, representing a year-over-year change of -4.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Calix. Also, the stock has a VGM Score of B.