Meta CEO Mark Zuckerberg appears at the Meta Connect event in Menlo Park, California, on Sept. 25, 2024.
David Paul Morris | Bloomberg | Getty Images
Meta Platforms shares jumped more than 6% Thursday after the company topped earnings expectations and showed advertising resilience in a murky macroeconomic environment.
“Key here is that Meta’s adv. demand trends appear to be relatively healthy and while we’re watching for any impacts from macro and lower spend from China-based advertisers given the de minimis change, Meta’s scale of users and advertisers + focus on newer products are offsetting some macro challenges,” wrote Citi’s Ronald Josey.
First-quarter revenues grew 16% from a year ago to $42.31 billion and topped a $41.10 billion estimate from LSEG. Earnings came in at $6.43 per share, versus the $5.28 per share expectation. Net income reached $16.64 billion, jumping 35% from $12.37 billion in the year-ago quarter.
The company also issued in-line guidance for the current period. Meta’s finance chief Susan Li said the company expects sales to range between $42.5 billion and $45.5 billion. Analysts polled by LSEG had forecast $44.03 billion in revenues.
“Our business is also performing very well, and I think we’re well positioned to navigate the macroeconomic uncertainty,” Meta CEO Mark Zuckerberg reassured analysts on an earnings call Wednesday.
Investors this earnings season are watching for signs that President Donald Trump’s tariff blit hampering advertising demand — where many technology businesses make up a sizeable chunk of revenues. Snap and Google have already warned of potential headwinds to their ad businesses.
Advertising revenue for the first quarter came in at $41.39 billion, topping a forecast of $40.44 billion from Wall Street. But Li told analysts that Meta has “seen some reduced spend in the U.S. from Asia-based e-commerce exporters,” which may stem from the ending of the de minimis trade loophole on Friday.
“The digital ad market is likely to get a bit jittery over coming months, but META’s performance orientation and significant AI ad investments should mean continued relative share gains against the field,” wrote Barclays analyst Ross Sandler.
Meta also upped its capital expenditures range to $64 billion to $72 billion from $60 billion to $65 billion to reflect more data center investments in artificial intelligence and a potential uptick in infrastructure hardware costs as trade uncertainty continues.
Bernstein’s Mark Shmulik called the hike in spending a “bold strategy” against an uncertain macroeconomic backdrop, but called Meta the “safest and most exciting dodgeball team around.”
“We continue to believe that Meta is well positioned for a tougher macro environment given its scaled advertiser base, highly performant platform, & vertical agnostic inventory,” wrote JPMorgan’s Doug Anmuth.
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