Home Most Popular Investing Meta Platforms to Report Mixed Q3 Results After Impressive YTD Gains

Meta Platforms to Report Mixed Q3 Results After Impressive YTD Gains

Meta Platforms to Report Mixed Q3 Results After Impressive YTD Gains

Meta Platforms (NASDAQ: META) is set to release its fiscal Q3 2023 results on Wednesday, October 25, 2023. While earnings are expected to exceed expectations, revenues are anticipated to fall short. In the previous quarter, the company outperformed street expectations with an 11% year-on-year increase in revenues to $32 billion. Daily active users (DAUs) and ad impressions on the META Family of Apps also saw growth of 5% and 34% respectively. However, the average price-per-ad declined by 16% year-on-year. It is likely that the Q3 results will follow a similar trend. For a detailed analysis, check out our interactive dashboard on Meta Platforms’ earnings preview.

Despite the ongoing financial climate, META stock has seen a staggering 150% year-to-date gain, currently sitting around $310 compared to $275 at the beginning of the year. However, these gains have not been consistent. The stock experienced returns of 23% in 2021, -64% in 2022, and a whopping 156% in 2023 (YTD). In contrast, the S&P 500 index saw returns of 27% in 2021, -19% in 2022, and 10% in 2023 (YTD). This indicates that META underperformed the S&P 500 in 2021 and 2022. Beating the S&P 500 consistently has proven challenging for individual stocks in recent years. Even heavyweight stocks in the Communication Services sector like GOOG, NFLX, and CMCSA, as well as megacap stars TSLA, MSFT, and AMZN, have struggled. On the other hand, the Trefis High Quality (HQ) Portfolio, which comprises 30 stocks, has consistently outperformed the S&P 500 each year. So why is that? As a group, the HQ Portfolio stocks have provided better returns with less risk compared to the benchmark index. Given the current uncertain macroeconomic environment, with high oil prices and elevated interest rates, will META face a similar situation in the next 12 months and underperform the S&P 500 or will it see a strong surge?

Our forecast suggests that Meta Platforms’ valuation is $310 per share, slightly above the current market price of around $309.

(1) Revenues Expected to Miss Consensus

Meta Platforms’ revenues grew by 7% year-on-year to $60.6 billion in the first two quarters of FY2023. This growth was driven by an expanding user base (DAUs) and increased ad impressions, despite a decline in per-ad revenue. Per-ad revenue has been impacted in 2023 due to challenging macroeconomic conditions. It is expected that Q3 revenues will reflect year-on-year growth. Overall, Meta Platforms’ revenues are projected to reach $127 billion in FY2023.

Trefis estimates Meta Platforms’ fiscal Q3 2023 net revenues to be around $32.98 billion, slightly below the consensus estimate of $33.57 billion.

(2) Earnings Per Share to Surpass Consensus Estimates

Meta Platforms’ Q3 2023 adjusted earnings per share (EPS) is expected to be $3.67 according to Trefis analysis, 1% higher than the consensus estimate of $3.63. The company’s net income decreased by 5% year-on-year to $13.5 billion in the first half of FY2023. However, it saw a 16% year-on-year increase in Q2, primarily due to higher revenues. This positive momentum is likely to continue in the third quarter. In total, a GAAP EPS of approximately $11.56 is estimated for FY2023.

(3) Stock Price Estimate is Slightly Above Market Price

Our valuation of Meta Platforms, based on a GAAP EPS estimate of around $11.56 and a P/E multiple just below 27x in fiscal 2023, translates to a price of $310, slightly above the current market price.

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year

Returns Oct 2023
MTD [1]
YTD [1]
Total [2]
META Return 3% 156% 168%
S&P 500 Return -1% 10% 89%
Trefis Reinforced Value Portfolio -2% 21% 520%

[1] Month-to-date and year-to-date as of 10/23/2023
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.