Meta Q2 Earnings Preview | META Stock Valuation & Technical Analysis

TL;DR

Meta Platforms (formerly Facebook) is facing challenges in revenue growth due to changes in online advertising, but there is potential for a turnaround if they can achieve higher revenue and maintain operating margins.

Transcript

what is going on investors hopefully guys are doing well out there we're on the eve of one of the bigger earnings weeks that we've had in a long time and on today's show we're gonna preview meta platforms earnings which comes just three days from now on wednesday july 27th after the closing bell of the stock market on today's show we'll look at som... Read More

Key Insights

• 🧑‍🤝‍🧑 Meta's stock has experienced a significant decline year-to-date, primarily due to challenges in revenue growth.
• 🥺 The iOS 14 changes implemented by Apple have impacted Meta's growth rate, leading to a decline in revenue and EPS.
• 🌓 Wall Street expects mediocre growth for Meta in the next four quarters, but there is potential for re-acceleration in 2023 and 2024.
• 💇 Cutting spending and reducing engineer hiring are strategies Meta is implementing to maintain operating margins.
• 🇺🇸 The banning of TikTok in the United States could be advantageous for Meta, but it remains uncertain if this will occur.
• 🫠 The profitability of short-form video ads and the success of Meta's shift into the metaverse are crucial factors that could affect the company's future growth and revenue.
• ❓ Meta's valuation appears attractive compared to historical averages, but its potential for growth depends on addressing the challenges in revenue growth.

Questions & Answers

Q: Can Meta achieve revenue growth of over $29 billion in a non-fourth quarter?

Meta has struggled to surpass $29 billion in revenue since the iOS 14 changes, but there is potential for growth if they can address the challenges and take advantage of opportunities in the market.

Q: Can Meta maintain its 30% operating margins?

While Meta has experienced a decline in growth rate, they have managed to maintain their operating margins. The company's cost-cutting measures and focus on maintaining profitability could support the retention of these margins.

Q: Will the United States ban TikTok?

The banning of TikTok in the United States would be beneficial for Meta as it could attract influencers and advertisers to platforms like Instagram. However, whether or not this ban will happen remains uncertain.

Q: Will short-form video ads be as profitable as text and image-based ads?

The shift towards short-form video ads presents a new challenge for advertisers. The profitability of these ads depends on their effectiveness in converting users and whether businesses adapt to this new format.

Summary & Key Takeaways

• Meta's stock is down 50% year-to-date, and the company is facing challenges in revenue growth compared to competitors like Google and TikTok.

• The iOS 14 changes implemented by Apple have significantly impacted Meta's growth rate, causing a decline in revenue and EPS.

• Wall Street estimates project mediocre growth for Meta in the next four quarters, but there is potential for a re-acceleration in revenue and earnings in 2023 and 2024.

• Meta is cutting spending and reducing engineer hiring, which might help maintain operating margins.

• The ban of TikTok in the United States and the profitability of short-form video ads are crucial factors that could impact Meta's future growth.

• The success of Meta's shift into the metaverse and whether it will replace revenue from Facebook.com and Instagram remains uncertain.