Meta Q1 Profits Exceed Expectations
On Wednesday, Meta, the parent company of both Facebook and Instagram, reported first-quarter revenues of $28.6B and profits of $5.7B, surpassing market expectations after heavy job cuts.
Facts
- On Wednesday, Meta, the parent company of both Facebook and Instagram, reported first-quarter revenues of $28.6B and profits of $5.7B, surpassing market expectations after heavy job cuts.1
- The profits of $2.20 per share, although down from $2.72 per share in Q1 of 2022, exceeded expectations of $2.02, as had been predicted in polling by FactSet. In reaction to the news, Meta shares rose nearly 12% to $234.20 in after-hours trading on Wednesday.2
- Meta first announced layoffs in 2022 before declaring a second round of job cuts in March this year. Meanwhile, the company reported that 3.02B people logged into at least one of its apps every day in March, with Facebook having 2.04B daily users.3
- On Thursday, Meta shares continued to rise to over a one-year high, while the S&P 500 and Nasdaq Composite both rose by over 1%. Shares of Amazon also saw an increase following the positive news for the technology sector.4
- Meta's CEO, Mark Zuckerberg, claimed that the positive Q1 results were partly attributed to the success of the company's artificial intelligence (AI) investments, claiming that Meta is well-positioned in the AI race and that its stronger financial position will allow the business to "weather a volatile environment."5
- Zuckerberg revealed that Instagram saw a 24% boost in time spent on the app after the introduction of AI-powered Reels. He reassured, however, that the company isn't abandoning a continued focus on the metaverse.6
Sources: 1BBC News, 2Associated Press, 3The Hill, 4Reuters, 5Yahoo Finance, and 6Business Insider.
Narratives
- Narrative A, as provided by Los Angeles Times. Meta follows the line of companies blowing expectations of profit margins for Big Tech in 2023. While the US economy continues to slow down, such results have made investors hopeful that any further increases in interest rates will not be a nail in the coffin, and potentially the economy may be stronger than it currently looks.
- Narrative B, as provided by USA Today. While Meta's profits and revenue are encouraging, caution should be exercised. Growth is growth, but the Q1 results are not by any stretch unfathomably impressive. It's unclear whether the company can return to its consistent double-digit growth of previous years, even if Q2 predictions expect further success for the tech giant.
