Meta Platforms (META) gearing up to report Q2 earnings. Here’s what to expect

Meta Platforms, Inc. (NASDAQ: META) had an impressive start to the fiscal year as its first-quarter profit more than doubled on strong revenue growth. The market will be expecting an encore from the tech titan when it releases second-quarter results next week.  

META is one of the best-performing Wall Street stocks, outshining competitors quite often and growing 33% this year alone. The stock peaked earlier this month, after recovering from the post-earnings selloff a few months ago when investors reacted negatively to the management’s weak guidance despite strong Q1 results. But it pulled back from the record high and the downtrend continued ahead of the earnings.

Bullish View

The social media giant’s second-quarter report is expected to be out on Wednesday, July 31, at 4:05 pm ET. It is estimated that earnings and revenues increased sharply year-over-year to $4.72 per share and $38.3 billion, respectively, in the June quarter. In the year-ago quarter, the company earned $2.98 per share, on revenues of $30.41 billion. The Meta management forecasts Q2 revenues in the range of $36.5 billion to $39.0 billion.

Meta reported strong results for the first three months of fiscal 2024, with net profit more than doubling to $12.4 billion or $4.71 per share. The impressive show reflected a 37% surge in Q1 revenues to $36.4 billion. The numbers also exceeded Wall Street’s projections. The number of family daily active people, which refers to registered and logged-in users of one or more of the family of apps who visited at least one of the sites on a given day, increased by 7% during the three months.

Ups Guidance

The company raised the full-year capex target to $35-40 billion from the earlier projection of $30-37 billion, mainly to accelerate infrastructure investments for supporting its AI roadmap. AI-based development of the company’s mixed-reality products, which are yet to contribute meaningfully to revenues, is one of the focus areas. The announcement triggered a stock selloff in April, with the management’s weaker-than-expected Q2 revenue guidance adding to investors’ concerns.  

Meta’s CEO Mark Zuckerberg said during the last earnings call, “We estimate that more than 3.2 billion people use at least one of our apps each day, and we’re seeing healthy growth in the US. I want to call out WhatsApp specifically, where the number of daily actives and message–sends in the US keeps gaining momentum and I think we’re on a good path there. We’ve also made good progress on our AI and metaverse efforts, and that’s where I’m going to focus most of my comments today.”

AI Push

There has been a steady increase in AI-generated content on Facebook and Instagram and the trend is expected to gather momentum, attracting advertisers and enhancing user engagement. In the long term, the strong network effect, diversified revenue streams, and advanced advertising tools should help the company maintain its dominance in the social media space.

Continuing its recovery from the recent downturn, Meta’s stock traded sharply higher on Friday. It hovered near the $470 mark in the afternoon, which is well above the 52-week average of $403.81.