Meta (META) stock surged in 2023, riding on the back of tech stock and AI gains, but faced earnings late on Wednesday.
META: Weekly Chart
The stock has stumbled at the $300 level and may be ready for a pullback as other stocks in the sector also show signs of topping out.
We now come to Meta, which is valued at 35x earnings and has surged this year after heavy losses in 2021–2022. Meta is likely fairly valued at the current price and would be at risk of slower results.
The company’s rebrand to the metaverse has so far been a failure, and the latest move was “Threads,” which was meant to be a challenger for Elon Musk’s now-rebranded Twitter. Despite a huge surge in users in its first week, the company saw many curious users leave.
The stock got an initial boost after the Wednesday release, which showed an 11% year-on-year improvement in revenue. The owner of Facebook and Instagram posted revenue of $32 billion and a net profit of $7.79 billion ($2.98 per share), which beat analysts’ expectations for $31.12 billion and earnings per share of $2.91, according to Refinitiv data.
“We had a good quarter. We continue to see strong engagement across our apps, and we have the most exciting roadmap I’ve seen in a while with Llama 2, Threads, Reels, new AI products in the pipeline, and the launch of Quest 3 this fall,” Meta CEO Mark Zuckerberg said in announcing the results.
However, the near-term outlook may be slower as the latest earnings are still recovering from a slump in ad revenue with a poor macroeconomic background. Facebook’s average daily active user count for June was said to be 2.06 billion, up slightly from 2.04 billion three months earlier and 1.97 billion a year ago.
The company’s stock has also been boosted by staff cuts, with 11,000 workers being shed over the last year.
