META is set to release earnings for the second quarter of 2023 after the bell on Wednesday.
In addition to Facebook parent company’s ad growth, investors will be watching the latest in artificial intelligence (AI), Instagram reels, newly launched Twitter competition threads and the company’s VR business Reality Lab.
Here’s what Wall Street expects from Meta, as compiled by Bloomberg:
Earnings: Estimated $31.06 billion
EPS: Estimated $2.92
Advertising revenue: Estimated $30.43 billion
App Family Earnings: Estimated $30.55 billion
Reality Labs operating loss: Estimated $3.68 billion
Facebook daily active users: Estimated 2.03 billion
Operating Margin: 30.4% estimated
In the first quarter, Meta expected second quarter revenue to be between $29.5 billion and $32 billion.
Overall, there is a fairly optimistic outlook for the meta in this earnings cycle, writes JMP Securities analyst Andrew Boone. He raised his price target on the company from $300 to $350 on July 17.
“We believe Meta is in the early stages to benefit from multiple product catalysts such as reels, AI and cost discipline,” Boone wrote. “Specifically, we expect Facebook and Instagram to continue to account for the share of user time as user engagement is improving and models are still improving, specifically with improvements to reels and recommendation algorithms.
As always, the digital advertising landscape will be key to Meta’s bottom line. According to Boone, there are implications for AI in this regard.
“We look forward to hearing how Meta incorporates generative AI to automate and improve their creatives.” [return on ad spend]“CEO Mark Zuckerberg recently said on a podcast that advertisers just give Meta a budget and a goal and the company does the rest.” We expect generative AI to be the key to automating more steps in campaign creation. ”
After Tuesday’s bell, Alphabet (GOOG, GOOGL) will also report second-quarter earnings, giving us an early grasp of the digital advertising market.
Thread, Reel, VR
Meta’s has had a rocky 2023 so far, monetizing both Instagram Reels and messaging on WhatsApp, and launching Twitter competitor Threads, which has become the fastest growing consumer app ever.
“It’s still early days as Threads has started [about] “With 50 engineers and a handful of product managers and designers in just five months, this is more of a bare-bones product today than a full-fledged platform. In our view, meta is trying to get a significant audience before it starts monetizing, so its evolution will be key to sustaining engagement,” said Boone.
At the social media giant’s earnings release, investors will be looking for an update on Meta’s VR division Reality Lab, which lost more than $13 billion in 2022. The company’s latest headset, the Meta Quest 3, is due out in the fall, just as the VR race is heating up, with Apple (AAPL) planning to enter the space later this year with its mixed reality headset, the Apple Vision Pro.
Meta shares are up about 134% year-to-date.
Ally Garfinkle Senior Tech Reporter at Yahoo Finance. follow her on her twitter @agarfinks and further LinkedIn.
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