Following the bell on Wednesday, Meta is scheduled to release its third-quarter earnings.
These are the crucial figures that Wall Street will be observing:
Earnings: LESG, formerly Refinitiv, reports that analysts anticipate $3.63 per share.
Revenue: $33.56 billion is anticipated by analysts, per LESG. Investor attention will also be on the quantity of users:
- According to StreetAccount, daily active users (DAUs) are anticipated to reach 2.07 billion.
- 3.05 billion monthly active users (MAUs) are anticipated, per StreetAccount.
- According to StreetAccount, the average revenue per user (ARPU) is anticipated to be $11.05.
Growth is finally back for Meta after a terrible 2022 that saw three consecutive quarters of declining year-over-year ad sales. After seeing an 11% increase in sales in the previous quarter, the company is predicted to grow by 21% in the third quarter.
In 2023, Meta has fared better in the difficult digital advertising market than its smaller competitors on social media, such as Snap, X (previously known as Twitter), and Pinterest. The price of Meta’s stock fell by about two-thirds in 2022, but it has since recovered by roughly 160% this year.
Meta is still attempting to recover from Apple’s 2021 iOS privacy update, which made it harder for firms to follow users online and harmed its online advertising operations, along with its ad-based competitors.
After Apple made adjustments, Meta seems to have advanced the most in terms of increasing the efficacy of its online advertising platform. The business has cited its significant investments in artificial intelligence as a crucial technological advancement that has aided Meta land merchants in providing clients with customized discounts.
However, Meta continues to confront several obstacles in its turnaround. Specifically, a bipartisan group of forty-two attorneys general filed a lawsuit against the business on Tuesday, citing claims that the items cause mental health problems for kids and teenagers.
In the previous quarter, Susan Li, the chief financial officer of Meta, stated that the company is still “aware of growing legal and regulatory obstacles in the EU & the U.S. that could significantly impact our operations and our financial results.” There could be fines of up to 6% of yearly sales under recently passed legislation from the European Commission, the EU’s executive body, called the Digital Services Act.
The DSA requires Meta, X, and others to remove illegal content and provide a report on their removal process. Due to the flood of false information and violent content that has been flowing in connection with the intensification of the Middle East crisis, the European Commission recently reaffirmed this statement.
Investors are also worried that another reduction in advertising spending may result from the Israel-Hamas conflict, much like how companies halted some marketing following Russia’s invasion of Ukraine.
When the Middle East war broke out, Snap “observed pauses in spending from a significant amount of primarily brand-oriented advertising campaigns,” the company noted in its third-quarter earnings report.
The amount of money that Meta is burning to develop the metaverse, which CEO Mark Zuckerberg has stated will be the company’s future, is another ongoing concern. Since the beginning of the year, Reality Labs—the division that houses the company’s virtual reality headsets and metaverse software—has lost almost $21 billion, and analysts predict an operational loss of $3.9 billion in the third quarter.