Meta (META) will report its first quarter earnings after the bell on Wednesday, with Wall Street looking for another sizable jump in revenue for the social media giant. Shares of Meta have been on a tear, climbing 116% over the last 12 months and more than 45% year to date. That’s far better than chief rival Google (GOOG, GOOGL) which is up 45% in the last 12 months and 16% year to date.
While part of Meta’s stock performance has to do with a recovery in the digital advertising market, the company’s stock price truly rocketed higher last quarter after the social media company announced it was initiating a $0.50 per share dividend and increased its stock buyback authorization by $50 billion.
For the first quarter, Wall Street is expecting Meta to report earnings per share of $4.30 on revenue of $36.1 billion, according to analysts’ estimates compiled by Bloomberg. That would mark another huge jump in EPS and revenue from the same quarter last year when the company reported earnings of $2.20 on revenue of $28.6 billion.
But JPMorgan Securities analyst Doug Anmuth says Meta’s growth spike could face trouble in the coming months.
“There is growing caution into earnings on almost-certain growth deceleration beyond 1Q due to tough [comparisons] & perception of lack of new drivers vs. [2023],” Anmuth wrote in a recent earnings note.
Wedbush analyst Scott Devitt was equally cautious in his own analyst note, saying that he will be primarily focused on “the pace of expected growth in 2Q and 2H24 against more challenging comps.”
Despite that potential headwind, Meta has a number of strengths going its way, including its continued effort in combating TikTok with its Reels platform. The company has also emerged as a potential early winner in the AI space, with the technology set to improve Meta’s overall advertising capabilities.
Meta has made a series of announcements regarding its AI efforts in recent months, including debuting its Meta AI chatbot and Llama 3 large language model on April 18. The chatbot, however, has already garnered controversy after it joined a private Facebook group for mothers in Manhattan and claimed to have a child of its own, 404 Media reported.
The bot, which is available across Facebook, Instagram, WhatsApp, Messages, and the Meta.AI website, also can’t be turned off even if users don’t want to use it.
Despite Meta’s increased emphasis on AI, CEO Mark Zuckerberg isn’t giving up on his quest to bring his vision for the metaverse to life. On Monday, he took a further step toward increasing the number of AR/VR headsets on the market, announcing that Meta will make its Horizon operating system for headsets open source, allowing third-party companies to use it to build their own devices.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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