Meta Platforms (formerly known as Facebook, Inc.) shall report its earnings result for Q1 2023 on 26th April (Wednesday), after market close. The technology conglomerate with market cap over $550B which is based in California, US, engages in connecting people and community as well as helping businesses to grow through its Family of Apps (FoA) including Facebook, WhatsApp, Instagram, Messenger etc. The company is also working on the development of augmented and virtual reality related consumer hardware, software and content (these are grouped under the Reality Labs (RL) segment), hoping to expand beyond 2D screens into the future of digital connection, namely the metaverse.
Fig.1: Meta’s Annual Revenue (in million USD), 2009-2022. Source：Statista
Meta’s annual revenue surpassed the $100B threshold for the first time ever in 2021. For FY 2022, its revenue was slightly down -0.01% (y/y) to 116.6B. This was also the first ever time in decade that the company reported losses in revenue. Also, net income was down -41% (y/y) to $39.37B.
Fig.2: Facebook DAU vs MAU. Source： Statista
Facebook remains the most popular social networking site worldwide, with 2.95B active users. Throughout 2022, the company continued to see its active users (both daily and monthly) growing but at a sluggish pace. As of Q4 2022, the company reported its DAU and MAU reached 2.0B and 2.963B, respectively, up 3.68% and 1.75% from the same period last year.
Fig.3: Reported Sales of Meta Platforms, Inc versus Analyst Forecast. Source：CNN Business
Meta Platforms, Inc reported 32.2B sales in the final quarter of 2022, up over 16% (q/q) from the previous quarter, but down -4.66% (y/y) from the same period last year (a third straight quarter of declining sales). Nevertheless, the management pointed out that its ad revenue (the segment which generates most of its revenue) slowed down -4% to $31.3B, following weak advertising demand and increasing competition globally. In addition, Apple’s app tracking transparency measures is expected to further adversely impact the company, while Reality Labs remains a money losing project at least in the near term. The outlook remains dim as CFO Susan Li stated, “… continues to be impacted by the uncertain and volatile macroeconomic landscape”. The company shall cut 10,000 job positions in the coming months, following its 11,000 job cuts in November last year. Lastly, its $725 million privacy settlement for a lawsuit shall also weigh on the outlook.
Fig.4: Reported EPS of Meta Platforms, Inc versus Analyst Forecast. Source： CNN Business
EPS was reported at $1.76 in Q4 2022. Total EPS for the year hit $8.59, down over -37% (y/y) from 2021. In the coming earnings release, consensus estimates for sales stood at $27.6B, down -14.3% (q/q) from the previous quarter, and remains flat with the same period last year. On the other hand, EPS is expected to reach $2.02, slightly up 14.8% (q/q) from the previous quarter, but down -25.7% (y/y) from the same period last year.
Technical Analysis
The #Meta (META.s) share price closed down over -3.8% last week. The asset price has experienced a strong rebound since Q4 2022, after gaining support at $88.09, a level not seen since July 2015. The 100-week SMA and $236 (FR 50.0%, extended from all time high seen in September 2021 to the lows in October 2022) serve as the nearest resistance to watch. Gaining a solid ground above the mentioned level may indicate a change in trend direction, and the bulls may continue testing the next resistance at $271 (FR 61.8%) and $321 (FR 78.6%). On the contrary, a break below the nearest support $201 may encourage more selling pressures, driving the asset price towards the next support at $158 (FR 23.6%) and $88.
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Larince Zhang
Market Analyst
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