The Q1 earnings season is heating up, and Meta Platforms (META) is set to release its earnings after the bell today. This move follows Tesla’s surprising Q1 earnings, which led to a significant stock upsurge, in stark contrast to Netflix’s recent plummet. The question now is – will Meta soar to new heights like Tesla, or tumble like Netflix? Let’s delve into this intriguing topic further.
2024 has showcased a stark juxtaposition between Tesla and Meta in terms of price action. Meta, with impressive year-to-date gains exceeding 40%, stands among the top five gainers in the S&P 500 Index, while Tesla lingers at the bottom, facing a 42% loss. This stark contrast sets the stage for an intriguing comparison.
This year’s price action for Meta encapsulates the market’s heightened expectations, reminiscent of the scenario with Netflix in the recent past.
Meta Q1 Earnings Preview
Analysts anticipate Meta to reveal revenues of $36.2 billion in Q1, marking a substantial 26.5% year-over-year surge. Their previous forecast of revenues between $34.5 billion to $37 billion for the first quarter exceeded estimates and triggered a significant rally in Meta stock post the earnings release.
Wall Street projects Meta’s Q1 earnings per share to increase by 63% year-over-year to $4.32. While the bear and bull patterns prevailed in 2023 and 2024, the growth momentum will likely taper off to slightly above 15% in 2025.
Meta Faces Tougher Comps Going Forward
Meta encountered a challenging phase in 2022, with its first-ever revenue decline since going public. However, the subsequent rebound and an intense focus on cost-cutting strategies led to a remarkable 73% rise in EPS in 2023.
Riding high on its earnings performance, Meta nearly tripled its stock value in 2023, positioning itself as the second-best performing stock in the Magnificent 7, right behind Nvidia. A $50 billion share repurchase program and the initiation of dividends further underscored Meta’s financial strength.
Looking ahead, tougher comparables and escalating expenses, especially in the Reality Labs segment dedicated to building the metaverse, pose new challenges for Meta in 2024. The company also foresees mounting costs in payroll and infrastructure.
What to Watch in Meta’s Q1 Earnings Release
As the Q1 earnings disclosure looms, all eyes are on Meta’s upcoming earnings call. The key areas to monitor include their Q2 guidance, insights on the digital ad market landscape, advancements in AI initiatives, and the unveiling of groundbreaking new concepts.
Meta Stock Forecast: Can It Hit Record Highs?
Despite Meta’s meteoric rise, analysts proceed with caution ahead of the Q1 report. KeyBanc analyst Justin Patterson nudged down the target price, underlining the need for Meta to deliver robust earnings to sustain current price levels.
An air of skepticism looms, drawing parallels with Netflix’s recent downward spiral post their Q1 earnings. The scrutiny intensifies as Meta’s YTD rally must align with earnings performance. Market sentiment remains bullish on Meta, with a ‘Strong Buy’ consensus rating, albeit with a modest 5.4% increase in the mean target price from the prior day’s close.
Will Meta set new record highs post-Q1 earnings, or will it face the market’s wrath akin to Netflix? The answer hinges on Meta’s ability to deliver outstanding Q1 numbers in a challenging financial landscape.