Meta – Shares Jump On Q1 Revenue Beat, Ai Said To Be Driving Good Results

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  • Meta Platforms Inc (NASDAQ:META)’s revenue rose 3% to $28.6bn, beating analyst expectations, reflecting advertising revenue of $28.1bn, which was up 4%
  • The number of Daily Active People using at least one of Meta’s platforms rose 5% to 3.02bn
  • A 10% jump in costs, including over $1bn in restructuring charges, meant operating profit was 15% lower
  • Meta’s AI work is said to be driving “good results”, Q2 revenue is expected to be $29.5-32bn. Restructuring costs means full year expenses are due to be $86-90bn
  • Meta expects the Irish Data Protection Commission (IDPC) to issue a decision in May in its inquiry relating to transatlantic data transfers of Facebook user data
  • The shares rose 9% in after-hours trading

Meta’s Earnings

Meta has seen its valuation receive another injection of goodwill as investors breathe a sigh of relief at the sight of a growing advertising revenue line. Growth is more sluggish than is ideal, but it’s ultimately better than expected.

Further momentum is expected to be harnessed in the second quarter, as Meta appears to draw a line in the sand where its advertising declines are concerned. This surprise advertising recovery could suggest consumer behavior isn’t slowing down as abruptly as thought, helping businesses to up their spending.

Meta is in a position where it’s still having to put efficiency first, in the form of headcount reductions and cost savings, while at the same time, trying to stoke fires for long-term growth. This includes continuing to spend on strategic areas like AI and the elusive metaverse.

Zuckerberg is well aware that his spending habits are being watched very carefully, and any renewed efforts to shift the budget to untested areas won’t go down well. That said, it’s very hard to penny-pinch your way to the top, leaving Meta walking a very fine line between keeping the lights on and making the future bright enough to excite investors.

Article by Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown