Meta (META) reported its third-quarter earnings on Wednesday, beating the top and bottom lines.
The company’s shares rose as much as 4% in after-hours trading, as it continues its recovery from a lackluster 2022.
Meta has been navigating difficult waters, establishing itself as an AI-driven advertising giant, and working its way through capital-intensive expansion into VR and AR. The parent company of Facebook and Instagram has been in the process of shoring up two key areas of interest to investors — its AI efforts, and its position in the digital advertising market, which has been in a long slump and is only showing signs of recovery.
Meta advertising revenue for the third quarter was $33.64 billion, compared to $32.94 billion expected. The company beat estimates for ad impressions, posting a 31% year-over-year increase, versus 29.6% expected.
Meta shares are up more than 140% year to date, significantly outperforming both the S&P 500 and the Nasdaq Internet Index, which are up about 9% and 34% this year, respectively.
“The stock has done well this year,” Neuberger Bergman analyst Daniel Flax told Yahoo Finance Live on Wednesday. “[If they can] Drive sustainable growth and translate that into earnings per share and free cash flow generation, and I believe the stock can continue to work its way up.
Meta’s immediate future may be mired in legal risks, as the company considers state and federal lawsuits 42 Attorney Generalwho claim that Facebook and Instagram features directed at children are addictive.
“We are disappointed that instead of working productively with companies across the industry to create clear, age-appropriate standards for the many apps used by teens, our attorneys general have chosen this path,” a Meta spokesperson said in a statement.
Currently, Wall Street analysts’ recommendations for Meta are divided into 60 buys, 7 holds, and 2 sells.
Here are the key numbers reported by Meta, compared to analyst estimates compiled by Bloomberg:
he won: Actual $34.15 billion, an increase of 23% year-on-year, compared to expected $33.52 billion
Earnings per share: Actual $4.39, up 168% year over year, versus $3.60 expected
Daily active users on Facebook: 2.09 billion actual versus 2.07 billion expected
Reality Labs operating loss: $3.74 billion actual, compared to $3.94 billion expected
Fourth quarter revenue forecast: $36.5 billion – $40 billion actual, compared to $38.76 billion expected
Zuckerberg’s “Year of Efficiency” initiatives appear to be paying off, as the company is lowering its capital expenditure forecast for 2023. It is revising the range to between $27 billion and $29 billion, a decline from the previously announced $27 billion to $30 billion. Billion dollar.
Meta’s suite of apps, which also includes WhatsApp, has generated revenue of more than $33 billion. The division’s operating income was $17.49 billion for the quarter, easily exceeding analysts’ expectations of $15.23 billion.
But Reality Labs, the company’s mixed reality business, has been the subject of controversy. So far, Meta has lost more than $20 billion while running Reality Labs, with $13.7 billion coming from 2022.
The company said it expects these losses to continue, and will increase significantly year-over-year in 2023. Meta recently launched the Quest 3 headset, priced at $499.99.
“We had a good quarter for our community and business,” Meta CEO Mark Zuckerberg said in a statement. “I’m proud of the work our teams have done to advance AI and mixed reality with the launch of Quest 3, Ray-Ban Meta smart glasses, and our AI studio.”
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