Brace yourself for another blow in Meta Earnings

Brace yourself for another blow in Meta Earnings ...

After the market closes, Meta () the company previously known as Facebook will release its first-quarter (Q1) results. After the last bloodbath we saw in Meta's stock last quarter, investors shorten themselves for another blow.

Meta Earnings: Brace yourself for Another Blow in Figure 1

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Is Meta's Meta still missing?

For the first time in Meta's history, Meta was down in the last quarter:

Facebook Active Users (DAUs) are shown in Figure 2.

Investor Relations with Meta

Meta's last quarterly earnings release has resulted in a loss of more than 26% of shares.

Meta predicts revenues to increase by about $27 billion and $29 billion for Q1, a ratio from 3% to 11% year over year.

According to the company, this lower-than-expected growth is driven by hot competition and the early-stage adoption of its Reels feature, which still monetizes less than Stories and Feed.

Changes to Apple iOS, macroeconomic challenges for advertisers, and current exchange rates should also affect Meta's revenues in Q1.

Due to data transfers across the Atlantic, Meta expects to have a significant impact on its European operations. This includes expenses of up to $90 million to $95 million. The previous projection had stated that CAPEX would be between $29 billion and $34 billion due to investments in data centers, servers, and office facilities.

Wall Street is too conservative on Meta's Q1 and underestimates the long-term monetization capacity of billion-user products such as Messenger and WhatsApp, according to Credit Suisse. A consultant is also concerned that advertising revenue should be in accordance with Q1 projections.

He predicts a decrease in ad revenue projection for 2023 and beyond in order to contemplate "mid-to-high teens nominal dollars of growth every year."

BMO Capital analyst is already anticipating the worst. He believes that Meta's stock might be harmed by a sequential decline.

Is Big Tech reaching its peak?

When it comes to investing in Meta stock, the major issue is whether Big Tech stocks are experiencing a slowdown as a whole. They may well have reached new highs after a period of rapid growth.

Netflix (, a major tech company,) - unexpectedly delivered a disappointing Q1. Its stock sank by as much as 40% during the following trading session, and NFLX's market cap slowed $60 billion along the way.

The tech and other growth sectors are naturally more sensitive to inflation, interest rates, and increased labor and operational expenses, as are the cases right now.

While the S&P 500 has dropped 22% year to date, Meta () is down 45%, Microsoft () is down 18%, Netflix is up 64%, and Alphabet GOOGL is down 17%. Apple () - has improved; it's down only 9%.

Big Tech's earnings are a mixed bag, according to experts. TECHnalysis' Bob O'Donnell believes that some big players will continue to show impressive performances.

Apple should continue to maintain its steady performance, led by the success of the iPhone, while cloud computing companies like Amazon, Microsoft, and Alphabet should continue to show excellent results.

Meta and Netflix should continue to be the shambles of Big Tech. Unlike their peers, they do not have diversified businesses to turn to for new growth trends.

The Bottom Line

The stock of Meta was dropped for the first time since the company had recorded a drop in new users in the last quarter. So if it happens again, the effect should be less, owing to the fact that the market is already anticipating a decrease in user numbers.

Meta maintains a robust business, market leadership, and plenty of money for future investments, but it is still completely dependent on advertising.

The biggest challenge will be to speed up new strategies to defeat the competition, particularly with TikTok and Snap. The company intends to do this with its Reels video feature.

The stalemate in demand should continue until Meta proves otherwise in the coming quarters, and this should put strong selling pressure on FB shares. It's likely that Meta's future outlook will be positive.

(Disclaimers: this is not investment advice. This author may be lengthy one or more stocks mentioned in this report. Aside from this, the article may contain affiliate links. These links do not influence editorial content. Thank you for assisting Wall Street Memes)

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