Meta Platforms’ Earnings on Deck – What To Expect

Meta Platforms' stock (NASDAQ: META) moves into earnings in a rare downtrend, down 7.48% YTD, and 1.16% off in the pre-market session. First-quarter 2025 earnings are set to be released after the market close later today, with markets looking for revenue of $41.36 billion (+13.5% YoY). Earnings per share (EPS) are projected between $5.21 and $5.29, significantly higher than the $4.71 reported in the first quarter of last year.

Analysts are keenly focused on Meta's ability to maintain its impressive growth trajectory, particularly within its core advertising business. Recent figures build on Meta’s strong 2024 performance, where revenue surged 22% to $164.5 billion, driven by AI-powered ad targeting and increased engagement across Instagram Reels and Facebook. Meta's consistent execution is notable, having surpassed revenue estimates for ten consecutive quarters and EPS estimates for eight straight quarters – a track record that sets a high bar for today's release.

The company’s AI investments remain central to its strategy. Analysts predict advertising revenue grew 13.5% year-over-year to $40.44 billion, fueled by AI-driven enhancements in ad targeting and conversion optimization, leveraging data from its vast user base exceeding 3.35 billion daily active users.

Increased engagement on platforms like Instagram Reels, where AI-curated content now reportedly makes up 40% of feeds, and the burgeoning monetization potential of WhatsApp are key factors supporting this outlook. Growth in the Asia-Pacific region, projected at 13.4% for Q1, is also expected to contribute significantly.

However, concerns linger about rising operational costs, particularly from AI infrastructure and metaverse development, which totalled $59.6 billion in capital expenditures in 2024 and are guided towards $60-$65 billion for 2025. Analysts will scrutinize whether AI-driven revenue gains can offset these investments, especially as competitors like Alphabet and Amazon intensify their AI advertising efforts.

Technicals Reveal Potential Pivots

Meta’s stock chart shows a potential double bottom pattern forming around $482, suggesting a bullish reversal if earnings exceed expectations. Immediate resistance lies at $588, aligned with a trendline connecting April’s rally and December 2024 peaks. A breakout above this level could propel shares toward $632, while failure to hold $482 may trigger a decline to $452, near the 200-day moving average.

The relative strength index (RSI) of 50 indicates neutral momentum, reflecting market indecision ahead of earnings. Short-term indicators appear bullish, with the current price trading above its 20-day exponential moving average ($540.48). However, the stock remains below key medium-term resistance levels, including the 50-day EMA ($575.61) and the 200-day simple moving average ($577.46), suggesting a potential consolidation phase.

Notably, the options market implies a ±9.2% post-earnings move, highlighting heightened volatility risks. Historical data shows Meta’s stock reacts evenly to earnings, with a 50% chance of positive or negative one-day returns. A beat on EPS and revenue, coupled with strong guidance for AI monetization, could reignite bullish sentiment, whereas misses or cautious commentary on ad spending may exacerbate recent declines.

The social media giant, a dominant force in digital advertising and a key player shaping the future of immersive experiences, has seen its stock navigate turbulent waters recently. After hitting an all-time high of $740.91 in mid-February 2025, shares experienced a significant pullback, declining roughly 26-35% before staging a partial recovery.

Despite the recent volatility, Meta retains its heavyweight status with a $1.40 trillion market capitalization and boasts a strong 26.14% year-over-year stock price increase, trading within a 52-week range of $427.11 to $740.91. The upcoming earnings figures and, perhaps more importantly, management's forward guidance, will be critical in determining whether the recent positive momentum can be sustained or if further consolidation is in store.

Regulatory Scrutiny, and AI Investments

Meta faces mounting regulatory scrutiny, particularly in the EU, where recent fines under the Digital Markets Act (DMA) have targeted alleged anti-competitive practices. A recent €200 million ($228 million) fine underscores this pressure. In the U.S., an ongoing antitrust trial examines whether Meta’s acquisitions of Instagram and WhatsApp stifled competition. These legal battles pose financial risks, with potential cumulative fines possibly exceeding $10 billion, and operational constraints that could limit growth initiatives.

Meta continues to bet heavily on AI and the metaverse, with Reality Labs (XR division) reporting $4.3 billion in Q4 2024 revenue, up 38% year-over-year. The upcoming release of AR wearables and enhanced VR experiences aims to solidify Meta’s position in immersive technologies, though profitability remains elusive for these ventures. The division continues to operate at a loss, and investors will be scrutinizing commentary on the path to profitability.

On the AI front, integrations across WhatsApp, Messenger, and Instagram have driven ad revenue growth, with AI-curated content now comprising 40% of Instagram feeds. However, rising energy costs from data centers, projected to increase carbon emissions by 15% annually, pose environmental, social, and governance (ESG) challenges that could alienate sustainability-focused investors.

Meta’s Q1 earnings report will serve as a litmus test. Success hinges on demonstrating AI’s monetization capabilities, managing regulatory pressures, and stabilizing user trust through Community Notes. Investors will demand proof that its substantial AI investments are yielding sustainable, profitable growth capable of offsetting rising costs and navigating the complex regulatory landscape.

Guidance on advertising revenue sustainability, Reality Labs spending discipline, and commentary on managing operational risks like content moderation will be paramount. While technical indicators and institutional backing provide a foundation for recovery, sustained growth requires clear evidence that Meta’s investments in AI and the metaverse can translate into profitable, scalable businesses. Investors should monitor post-earnings guidance and management commentary on cost controls, as these factors will likely dictate Meta’s trajectory through 2025.