Meta Beats Expectations but Faces Growth Slowdown

On January 29, after the market closed, Meta Platforms (META), the parent company of Facebook, reported strong fourth-quarter 2024 earnings that exceeded analysts’ predictions. However, the company anticipates slower revenue growth for the upcoming quarter and indicated that expenses for 2025 will rise faster than they did last year.

Strong Earnings Report

Adjusted earnings per share reached $8.02, surpassing the Zacks Consensus Estimate of $6.68 and marking a notable 49% increase from the previous year. Revenue also saw a 21% year-over-year growth, totaling $48.39 billion against an expected $46.97 billion.

As of December, Meta’s global daily active users across its platforms (including Facebook, WhatsApp, Instagram, and Messenger) climbed 5% to 3.35 billion. In a forward-looking statement, CEO Mark Zuckerberg expressed optimism that 2025 will herald the launch of a top-tier AI assistant that will reach over 1 billion users, with Meta AI positioned to lead this initiative.

To support its ambitious plans, Meta is ramping up its capital expenditures, with projections for 2025 set between $60 billion and $65 billion—significantly higher than Wall Street’s estimate of $52.41 billion. Total expenses are anticipated to be in the $114 billion to $119 billion range, primarily driven by infrastructure investments.

Looking ahead, Meta forecasts a slowdown in revenue growth for the current quarter, estimating revenues between $39.5 billion and $41.8 billion, which represents an 8% to 15% increase year-over-year. The Zacks Consensus Estimate is currently at $41.60 billion.

ETFs That Include Meta

iShares Global Comm Services ETF (IXP)
This ETF provides global exposure to sectors like media and telecommunications, tracking the S&P Global 1200 Communication Services Index. With a fund size of $409.4 million, it centers on 66 stocks, with Meta holding a substantial 23.4% share. The ETF experiences an average daily volume of 15,000 shares and has a 0.41% expense ratio. It carries a Zacks ETF Rank of #3 (Hold), indicating a medium risk outlook.

Fidelity MSCI Communication Services Index ETF (FCOM)
FCOM tracks the MSCI USA IMI Communication Services Index and holds 109 stocks, also featuring Meta prominently at 22.6%. The fund has accumulated $1.4 billion and trades an average of 136,000 shares daily, with an annual fee of 8 basis points and a Zacks ETF Rank of #3 (Hold).

Vanguard Communication Services ETF (VOX)
VOX focuses on the communication sector by tracking the MSCI US Investable Market Communication Services Index. It includes 117 stocks, with Meta representing 22% of the holdings. VOX has $4.7 billion in assets and averages 132,000 shares traded per day, charging 10 basis points in fees, and maintains a Zacks Rank of #3.

Communication Services Select Sector SPDR Fund (XLC)
XLC targets companies in telecommunications and media, managing $21.2 billion in assets. It follows the Communication Services Select Sector Index and includes 22 stocks, with Meta accounting for 20.1%. The fund charges 9 basis points and trades around 4 million shares daily, earning a top Zacks ETF Rank of #1 (Strong Buy).

First Trust Dow Jones Internet Index Fund (FDN)
Following the Dow Jones Internet Composite Index, FDN focuses on the Internet industry with about 40 stocks, Meta again taking the lead with a 10.5% stake. As a highly liquid option in the tech space, FDN has $7.2 billion in assets and sees an average daily volume of 345,000 shares, charging an annual fee of 51 basis points and rated #1 by Zacks.

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For more ETF research reports, check out:
First Trust Dow Jones Internet ETF (FDN): ETF Research Reports
Vanguard Communication Services ETF (VOX): ETF Research Reports
Fidelity MSCI Communication Services Index ETF (FCOM): ETF Research Reports
iShares Global Comm Services ETF (IXP): ETF Research Reports
Communication Services Select Sector SPDR ETF (XLC): ETF Research Reports
Meta Platforms, Inc. (META): Free Stock Analysis Report

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