Meta (META) will report its first quarter results after the bell on Wednesday, with Wall Street expecting another sizable increase in revenue from the social media giant. Shares of Meta are on a strong rise, climbing 116% over the past 12 months and more than 45% since the start of the year. This is much better than its main rival Google (GOOG, GOOGL) which is up 45%. in the last 12 months and 16% year to date.
Although part of Meta’s stock performance is tied to the recovery of the digital advertising market, the company’s stock price really soared last quarter after the social media company announced that it initiated a dividend of $0.50 per share and increased its share repurchase authorization by $50 billion. .
For the first quarter, Wall Street expects Meta to post earnings per share of $4.30 on revenue of $36.1 billion, according to analyst estimates compiled by Bloomberg. This would mark another sizable increase in EPS and revenue compared to the same quarter last year, when the company reported a profit of $2.20 on revenue of $28.6 billion.
But Doug Anmuth, an analyst at JPMorgan Securities, says Meta’s strong growth could run into trouble in the coming months.
“There is growing caution on earnings amid an almost certain deceleration in growth beyond the first quarter due to challenging conditions. [comparisons] & perception of the lack of new pilots compared to [2023],” Anmuth wrote in a recent earnings note.
Wedbush analyst Scott Devitt was similarly cautious in his own analyst note, saying he would focus primarily on “the pace of expected growth in 2Q and 2H24 versus more difficult”.
Despite this potential headwind, Meta has a number of strengths, including its continued efforts to combat TikTok with its Reels platform. The company has also become an early potential winner in the AI space, with technology intended to improve Meta’s overall advertising capabilities.
Meta has made a series of announcements regarding its AI efforts in recent months, including the launch of its Meta-AI chatbot And Large Lama 3 language model on April 18. The chatbot, however, has already sparked controversy after it joined a private Facebook group for Manhattan mothers and claimed to have a child of its own, 404 media reported.
The bot, available on Facebook, Instagram, WhatsApp, Messages and the Meta.AI website, also cannot be disabled even if users do not want to use it.
Despite Meta’s increased focus on AI, CEO Mark Zuckerberg isn’t giving up on his quest to bring his vision for the Metaverse to life. On Monday, it took another 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.
