Meta Stock is PLUNGING | Is The Thesis BUSTED?

TL;DR

Meta Platforms (Facebook) reported earnings, with revenue shrinking but beating estimates, while earnings per share fell significantly. The company's focus on investing in the metaverse and AI is impacting profitability.

Transcript

good morning everyone meta platforms better known as Facebook reported earnings last night and shares are down over 20 in pre-market trading what is going on here is this a broken company or just a broken stock let's spend the next 10 minutes finding out my name is Brian stoffel thanks for joining me and as of the time of this recording I do not ow... Read More

Key Insights

• 🧑‍🏭 Meta Platforms' revenue exceeded expectations, but earnings per share significantly declined due to various factors, including increased research and development costs.
• 👤 User metrics for the company showed positive growth in monthly active users and family monthly active people.
• 🚚 Meta Platforms is investing heavily in the metaverse and AI, with a focus on delivering personalized content and expanding monetization efforts.
• 🥶 The company's operating expenses, especially research and development costs, should be closely monitored, along with average revenue per person and free cash flow.

Questions & Answers

Q: How did Meta Platforms perform in terms of revenue in the third quarter?

Meta Platforms' revenue shrunk by 4% in the third quarter, but it still exceeded expectations and fell within management's guidance.

Q: Why did the company's earnings per share fall significantly?

Meta Platforms' earnings per share fell by half compared to last year and missed Wall Street's estimates due to various factors, including increased research and development costs and lower ad prices.

Q: How did user metrics for Meta Platforms look in the third quarter?

Monthly active users for Facebook were up in the US and Canada, down in Europe, and up in the Asia Pacific region and rest of the world. Family monthly active people across WhatsApp, Facebook Messenger, and Instagram continued to climb.

Q: What are Meta Platforms' plans for the future?

Meta Platforms plans to focus on AI discovery, investing in the ad business and messaging platforms, as well as heavily investing in the metaverse. The company believes people will spend a significant amount of time in virtual or augmented reality.

Key Insights:

• Meta Platforms' revenue exceeded expectations, but earnings per share significantly declined due to various factors, including increased research and development costs.
• User metrics for the company showed positive growth in monthly active users and family monthly active people.
• Meta Platforms is investing heavily in the metaverse and AI, with a focus on delivering personalized content and expanding monetization efforts.
• The company's operating expenses, especially research and development costs, should be closely monitored, along with average revenue per person and free cash flow.
• Despite the challenges in the macroeconomic environment, Meta Platforms' valuation has become more appealing, but success in the metaverse is crucial for future growth.

Summary & Key Takeaways

• Meta Platforms' third-quarter revenue shrunk by 4%, but it still exceeded Wall Street's expectations and fell within management's own guidance.

• Earnings per share came in at half of last year's figure, missing Wall Street estimates by a wide margin.

• Gross margins and net margins saw declines, affecting the company's balance sheet and cash flow.