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Is Meta Platforms Poised for Another Earnings Beat?

Analyst Team trader
Updated 16 Apr 2024

As Meta Platforms Inc (NASDAQ: META) prepares to unveil its quarter one (Q1) 2024 financial results on April 24 (after market close), markets are bracing for what is anticipated to be an impressive performance report.

The forecast for Meta's Q1 revenue is eye-catching, with predictions set for a 26% year-on-year surge to a substantial $36.1 billion. This growth aligns with the leading tech company's consistent performance in the sector, which is further bolstered by an expected earnings per share (EPS) that is nearly double that of the previous year at $4.29.


Advertising Spread and Strategy

Underpinning Meta's ascendancy is a robust net profit margin that stands at 31.1% for the reporting quarter, a noteworthy improvement from the 19.9% margin it reported just a year ago. The company’s financial health is largely driven by its advertising revenue model, with more than 96% of its topline coming from ad spend. The geographical spread of this revenue is well-diversified, with significant contributions from its core markets – 40% from the US and Canada, 26% from the Asia Pacific region, and 23% from Europe.

Forecasts suggest that the buoyant mood in the US advertising market will sustain, with a growth projection of 9% in 2024 to a total of $369 billion. Notably, the upcoming US presidential election is expected to provide a further boost to political advertising expenditures, likely augmenting Meta's revenue streams from its already dominant ad space.

AI Utilisation

In an era where technological innovation remains a critical competitive edge, Meta has been active on this frontier as well. The company recently launched its next-generation Meta Training and Inference Accelerator (MTIA), an in-house artificial intelligence (AI) chip designed to refine ad effectiveness and to spearhead the development of novel AI products and services.

Looking to the horizon of generative AI, Meta has confirmed the pipelines of its ground-breaking project called Llama 3 – the next iteration of its large language model. This innovation aims to significantly upgrade its generative AI assistants, setting the stage for Meta to be at the forefront of AI application in the tech industry.

Meta Stock Sentiment

Stifel have raised Meta Platforms price target raised to $588 from $527 and keeps a Buy rating on the shares. For shareholders, the good news starts with Meta's maiden dividend announcement, which transpired back in February 2024. The company has introduced a quarterly dividend of $0.50 per share, leading to an attractive annual return of $2.00 for investors. This move could further seduce the market's dividend-seeking investors towards Meta's stock.

Meta share price has exhibited stellar market performance, really delivering for shareholders so far in 2024, reflected by a 44.45% return year-to-date. Even with the wider market pullback applying pressure across the stockosphere, at a shade over $500, Meta stock is more than double the level of just 12 months ago. Capital growth and dividends? One of the Magnificent 7 indeed.

As Meta Platforms steps into the limelight with its Q1 results on the horizon, the sweeping prospects across revenue growth, profit margins, dividends, and cutting-edge product advancements offer a tapestry of strengths that underscore the company's market position.

In other Meta news, Threads in Turkey will temporarily cease, starting from April 29th.

The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.